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Author: 


Minster,  Leopold 


Title: 

Retail  profits,  turnover 
and  net  worth 

Place: 

New  York 

Date: 

[1921] 


MASTER   NEGATIVE  « 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION  DIVISION 

BIBLIOGRAPHIC  MICROFORM  TARGET 


ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


Minster,  Leopold. 

Retail  profits,  turnover  and  net  worth;  simple  methods 
of  determining  gross  profit,  expense  and  net  profit  in  any 
size  store ;  with  concise  forms  for  approximating  stock  on 
hand  any  month,  week  or  day,  and  finding  average  stock 
and  turnover,  by  Leopold  Minster  ...  New  York,  U.  P.  C. 
book  company,  inc.  ['1921] 

48  p.    illus.  (forms)    24^". 

Reprinted  from  Atlantic  coast  merchant. 

1.  Department  stores — Accounting.       i.  Title. 


Library  of  Congress 
Copyright    A  624500 


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Retail  Profits 

Turnover  and  Net  Worth 


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LEOPOLD  MINSTER 


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THE  LIBRARIES 


GRADUATE 

SCHCX)L  OF  BUSINESS 

LIBRARY 


V 


1 1 


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Retail  Profits,  Turnover 
and  Net  Worth 


Simple  Methods  of  Detennining  Gross  Profit,  Expense  and  Net 
Profit  in  Any  Size  Store;  with  Concise  Forms  for  Approximating 
Stock  on  Hand  any  Month,  Week  or  Day,  and  Finding  Average 

Stock  and  Turnover 


By 

LEOPOLD    MINSTER 


RepriiUed  from 
Atlcmtic  Coast  Merchant 


NEW  YORK 

U.  p.  C.  BOOK  COMPANY,  Inc. 

243-249  West  39th  Street 


5^ 


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4 


if^  if  2^0  LP   0 


CoPYaiGHT,  1921 
U.  p.  C.  BOOK  COMPANY,  Inc. 


HAMMOND  PNC** 

W.  ■.  CONKCY  COMPAMT 

CHICAGO 


Foreword 

THIS  booklet  should  be  especially  helpful  to  the  retail  merchant. 
It  is  based  on  the  author's  years  of  experience  as  a  merchant's 
accountant,  and  as  a  writer  on  modem  systems  for  leading  business 
publications.  The  methods  he  advocates  are  described  accurately,  thor- 
oughly and  in  clear  and  simple  language. 

The  fundamentals  of  Leopold  Minster's  training  were  obtained 
during  nineteen  years  of  work  as  one  of  the  chief  lieutenants  of  the  late 
Isidor  Straus,  senior  partner  of  E.  H.  Macy  &  Co.  and  L.  Straus  &  Sons, 
a  member  of  the  firm  of  Abraham  &  Straus  and  director  of  some  of  the 
leading  financial  institutions  of  the  country. 

Subsequently  Mr.  Minster  established  himself  as  consultmg 
accountant  and  in  this  capacity  his  services  have  been  called  upon  by 
merchants  from  all  parts  of  the  world. 

Three  facts  particularly  fit  Mr.  Minster  for  the  wntmg  of  this 

work: 

1.  That  during  his  career  as  a  consulting  accountant  he  has 
*  specialized  in  the  simplification  of  big  store  systems  and  their 

adaptation  to  the  needs  of  the  medium  and  smaller  stores. 

2.  That  he  has  ever  borne  in  mind  the  accounting  needs  of  a 
store  whose  books  are  not  kept  on  the  **  double  entry"  plan. 

3.  Recognizing  his  exceptional  opportunities  for  keeping  in  touch 
with  the  progress  constantly  being  made  in  his  field,  he  de- 
voted much  of  his  time  to  describing  practically  his  day  to 
day  work  in  leading  publications. 

Thus,  as  an  authority  in  his  particular  field,  Mr.  Minster  stands 

alone.  ,     , .     i.  x 

The  material  in  this  hand-book  was  written  by  him  for  presenta- 
tion in  the  Atlantic  Coast  Merchant  in  serial  form  and  has  been  revised 
by  him  for  this  work.  Every  method  here  shown  is  in  actual  use  in 
successful  stores.  Every  amount  included  in  the  schedules  is  based 
on  actual  trading  in  a  store  whose  sales  total  last  year  was  about 

$100,000.  ,         .  ^.      X  ^ 

In  Chapter  I  are  presented  the  simplest  and  most  direct  ways  ot 
determining  the  store's  gross  profit  and  gross  profit  percentage  and  of 
testing  the  figures  found. 

8 


4  Retail  Profits,  Turnover  and  Net  Worth 

In  Chapter  11  are  shown  equally  simple  ways  of  determining  the 
store's  net  profit.  How  to  test  the  results  in  such  a  way  as  to  present 
to  the  merchant  a  clear  picture  of  what  became  of  his  net  profit,  if  he 
really  made  any,  is  also  described.  This  chapter  alone,  if  taken  to  heart 
and  applied  to  his  own  affairs,  may  mean,  to  many  a  merchant,  the 
turning  point  in  his  business  career.  For  it  shows  in  a,  b,  c  form 
how  to  present  a  picture  of  the  real  progress — or  retrogression — of 
his  business  from  year  to  year. 

It  is  difficult  to  overestimate,  too,  the  value  of  the  schedule  which 
forms  the  main  feature  of  Chapter  III.  By  using  the  a,  b,  c  methods 
therein  graphically  illustrated  by  Mr.  Minster,  a  merchant  can  keep  in 
close  touch  with  his  merchandising.  Thus  he  can  minimize  his  losses 
through  overbuying  and  underselling.  The  schedule  in  Chapter  III 
in  brief  shows  the  merchant  how,  with  a  few  minutes'  work,  he  can 
record  and  follow  up  for  comparative  purposes  his  total  purchases, 
sales,  approximate  gross  profit  earned,  stock  on  hand,  etc.,  so  that  he 
can  determine: 

1.  Whether  his  purchases  are  O.  K. 

2.  Whether  his  sales  totals  are  as  planned. 

3.  Whether  his  fire  insurance  is  ample. 

4.  Whether  his  gross  profit  is  covering  his  requirements  for 
expenses  and  net  profit.  Thus,  if  anything  even  looks  wrong, 
he  can  immediately  take  steps  to  check  it. 

In  other  words,  Mr.  Minster  presents  a  method  which  makes  it 
possible  for  the  merchant  to  use  foresight  instead  of  hindsight.  That 
is,  to  know  how  his  business  is  going  all  the  time,  instead  of  waiting 
until  the  end  of  the  year,  or  even  longer,  when  it  may  be  far  too  late 
to  remedy  matters.  ' 

In  addition  to  doing  all  the  above  valuable  work,  the  concise 
schedule  prepared  by  Mr.  Minster  for  Chapter  III  shows  the  merchant 
the  simplest  way  to  find  his  average  stock  and  thus  enables  him  to 
readily  compute  how  many  times  he  has  turned  his  stock,  NJumberless 
articles  have  been  written  on  this  subject,  but  this  is  probably  the 
first  time  that  there  has  appeared  in  book  form  such  a  simple  and 
practical  method  of  getting  at  and  following  up  the  vital  figures. 

In  Chapter  IV  Mr.  Minster  supplements  the  analyses  suggested  in 
Chapter  II  by  showing  how  to  make  tests  to  determine  whether  the 
amount  of  cash  on  hand  at  the  end  of  the  year  tallies  with  the  amount 
of  cash  that  ought  then  to  be  on  hand. 

This  chapter  also  shows  how  to  determine  what  was  each  month's 
share  of  the  year's  purchases  and  sales. 

One  of  the  main  purposes  of  the  tests  in  Chapters  II  and  IV  is  to 
enable  the  merchant  to  determine  whether  the  store's  bookkeeping 
system  as  a  whole  produces  accurate  results  and  gives  the  information 
required. 


<j 


Toreword  5 

In  Chapter  V  are  taken  up,  in  regard  to  each  department,  the  gross 
profit  figuring,  etc.,  which,  for  the  store  as  a  whole,  was  taken  up  in 
Chapter  I.  How  to  determine  the  percentage  of  goods  returned  by 
*'cash"  customers,  by  ** charge"  customers  and  by  **all"  customers  is 
also  shown  in  Chapter  V. 

One  of  the  main  purposes  of  Chapter  VI  is  to  throw  light  on  a 
point  regarding  which  there  is  much  misunderstanding,  viz. :  the  radical 
difference  between  the  percentage  of  gross  profit  which  is  found  when 
the  cost  price  is  used  as  the  basis  for  figuring  and  the  corresponding 
percentage  that  is  found  for  the  same  gross  profit  when  the  selling 
price  is  used  as  a  basis.  For  instance,  the  unwisdom  of  calling  a  gross 
profit  50  per  cent  on  cost  price,  instead  of  33  1/3  per  cent  on  selling 
price. 

Another  vital  point  emphasized  by  Mr.  Minster  in  Chapter  VI  is 
the  importance  of  so  providing  in  advance  for  unavoidable  price  reduc- 
tions, shrinkages,  expenses,  etc.,  that  when  the  final  results  are  deter- 
mined, the  net  profit  will  be  a  satisfactory  one  to  the  business.  In 
brief,  in  Chapter  VI  Mr.  Minster  endeavors  to  make  clear  that  even 
though  goods  may  be  bought  right,  tBey  must  be  marked  right  and  then 
sold  right  in  order  that  results,  satisfactory  to  all  concerned,  will  be 
forthcoming.  In  Chapter  I,  moreover,  Mr.  Minster  shows  how  to  figure 
gross  profit  percentages  both  on  the  cost  price  and  on  the  selling  price 
of  the  goods  sold. 

In  Chapter  VII  Mr.  Minster  presents  one  of  the,  if  not  the  very 
simplest  methods  of  following  up  stock  on  hand  in  such  departments  as 
Wearing  Apparel,  Shoes,  Rugs,  Furniture,  etc.,  with  a  view  to  avoiding 
loss  through  overbuying  and  underselling.  In  other  chapters  this  mat- 
ter is  taken  up  only  as  to  dollars  and  cents  amounts.  In  Chapter  VII 
the  work  is  taken  up  regarding  the  goods  themselves,  item  by  item. 
In  other  words,  in  Chapter  VII  Mr.  Minster  shows  how  to  follow  up 
quantities,  sizes,  styles,  colors,  etc.,  so  that  slow  moving  goods  can  be 
** pushed"  while  fast  moving  goods,  if  advisable,  can  be  promptly  re- 
ordered. More  than  that,  he  shows  how  the  precise  gross  profit  made — 
on  each  item,  or  each  day — can  readily  be  determined  in  an  extremely 
simple  manner. 

In  Chapter  VIII  is  shown  how  one  store  divided  the  rent  charges 
(for  the  space  used  for  selling)  among  its  various  departments  during 
three  different  years. 

In  Chapter  IX  is  shown  what  cash  discounts  the  same  store  earned 
during  the  same  three  years. 

The  Publisheb. 


Table  of  Contents 


CHAPTER  I 
Knowing  Where  You  Are  At  vs.  Groping  in  the  Dark 


CHAPTER  II 
Do  You  Know  Your  Net  Profits  and  Where  They  Went?.    ...  14 

CHAPTER  III 
Simple  Schedule  Shows  Vital  Facts  of  Your  Business 20 

CHAPTER  IV 
This  Test  Shows  Whether  Your  Books  Were  Kept  Right.   ...  25 


CHAPTER  V 
How  TO  Find  the  Weak  Spots  in  Your  Merchandising, 


30 


CHAPTER  VI 
Buy  Your  Goods  Right,  Then  Mark  Them  Right,  and  Sell  Them 


Right 


35 


CHAPTER  Vn 

Stock  Record  Shows  at  Glance  What  You  Want  to  Know.   ...  39 

CHAPTER  VIII 

What  Share  of  Rent  Are  You  Paying  for  Your  Part  of  Sell- 
ing Space!  44 


CHAPTER  IX 
Cash  Discount  for  Three  Years  Compared  At  a  Glance 

6 


47 


C3EIAPTERI 

Knowing  Where  You're  At  t;^.  Groping  in  the  Dark 

AT  a  recent  convention  two  business  men  discussed  the  value  of  good 
-  accounting  methods.  The  one,  a  credit  man,  had  for  years  been 
connected  with  the  handling  of  the  customers'  accounts  of  a  wholesale 
house ;  the  other  had  gained  his  experience  mainly  as  a  general  manager 
of  a  retail  concern.  The  credit  man  maintained  that  the  merchant 
ought,  at  all  times,  to  be  prepared  to  give  to  his  creditors  that  informa- 
tion regarding  his  financial  condition  to  which  they  are  entitled.  He 
added,  moreover,  that  **The  experienced  retailer  who  extends  credit 
to  customers  does  so  only  after  he  is  satisfied  that  they  are  a  safe 
risk  for  the  amounts  involved.  If  he  is  in  doubt,  he  will  as  diplo- 
matically as  possible  obtain  from  or  through  them  the  information 
which  will  enable  him  to  make  up  his  mind. 

**  Naturally,  therefore,  when  he  himself  asks  for  credit  he  ought 
to  regard  it  as  only  fair  and  sensible  for  him  to  be  in  a  position  to 
give  his  creditors  the  data  they  need  for  their  mutual  protection.  For 
each  time  he,  the  retailer,  opens  an  account  with  new  creditors,  do 
they  not,  in  a  sense,  become  partners  in  his  enterprise?  Are  they  not 
interested  in  the  success  of  his  venture,  at  least,  in  accordance  with 
the  value  of  the  goods  which  they  are  giving  him  *  on  time '  f 

Data  Asked  for  by  Credit  Men 

**To  safeguard  his  credit,  therefore,  the  merchant  ought  to  be 
in  a  position  to  answer  such  questions  as  the  following: 

1.  **What  was  the  total  of  the  merchandise  inventory  with  which 

you  started  the  year? 

2.  **What  was  the  total  of  the  merchandise  inventory  with  which 

you  ended  the  year? 

3.  **What  was  the  total  of  your  purchases  last  year? 

4.  **What  was  the  total  of  your  sales  last  year? 

5.  **What  was  the  total  of  your  store  expenses  last  year,  and 

what  did  you  include  therein? 

6.  ^*Are  the   expenses    (including  rent,  depreciation,   owner's 

wages,  etc.)  so  carefully  classified  and  recorded  that  he  can 
readily  determine  whether,  and  where,  he  is  spending  too 
much  or  too  little — and  thus  minimize  either  waste  or  in- 
judicious economy? 

7.  **What  was  your  trading  net  profit  last  year? 

8.  **What  other  income  did  your  business  have? 


\ 


/ 


8 


Eetail  Profits,  Turnover  and  Net  Worth 


Knowing  Where  You're  At  vs.  Groping  in  the  Dark 


9.  **What  were  your  resources  and  your  liabilities  at  the  start 
of  last  year? 

10.  **What  were  your  resources  and  your  liabilities  at  the  end 

of  last  year!" 
[Note:    The  object  of  questions  9  and  10  is  to  find  out  how  the 
net  profit  of  the  year  affected  the  store's  resources  and  liabilities.] 

11.  **Was  there  in  bank,  and  on  hand,  at  the  start  of  the  year, 

the  amount  of  ca^h  then  called  fort 

12.  **Is  there  at  present,  in  bank  and  on  hand,  the  amount  of 

co^/i  called  fort" 

The  Merchandise  Man's  Viewpoint 

To  all  of  this  the  merchandise  man  replied : 

**  Whether  he  needs  that  information  for  his  creditors  or  not,  the 
merchant  ought  certainly  to  want  it  for  his  own  guidance.  In  brief, 
if  he  wishes  to  build,  not  merely  for  the  present  but  also  for  his  future 
progress,  and  do  his  work  with  self-confidence  instead  of  groping  in 
the  dark,  he  ought  at  any  time  to  be  able  to  determine  not  only  the 
answers  to  the  foregoing  questions,  but  also  the  answers  to  the  fol- 
lowing ones : 

1.  **What  is  the  approximate  total  of  the  store's  gross  profits 

since  the  last  inventory  t 

2.  "What  is  the  approximate  value  of  the  stock  on  hand? 

3.  **How  much  did  the  store's  average  stock  amount  to  last  yeart 

4.  "How  many  times  was  that  average  stock  turned  last  yeart 

5.  "What  percentage  on  the  store's  merchandise  payments  last 
year  did  the  cash  discounts  average  t 

In  marking  goods,  is  there  always  added  to  laid-down  cost 

a  percentage  sufficient  to  provide  for  a  fair  net  profit,  after 

reductions,  expenses,  shrinkages,  etc.,  are  duly  taken  into 

consideration  t 

7.  "Of  that  part  of  the  store's  merchandise  (such  as  wearing 

apparel,  shoes,  etc.)  which  must  be  followed  up  closely  in 

order  to  bring  a  satisfactory  profit,  which  sizes,  colors, 

widths,  styles,  qualities,  etc.,  are  on  handt 

"Which  of  these  items  are  and  which  are  not  selling  right t 

"What  was  the  total  quantity  bought,  and  how  much  was 

sold,  of  each  itemt 
"What  was  the  gross  profit  made  on  each  itemt" 
Experienced  merchants  realize  that  the  data  referred  to  by  both 
of  these  men  is  essential  to  efficient  business  management.  Many  a 
merchant,  moreover,  has  heard  such  suggestions  time  and  again  and 
has  wondered  how  he  could  apply  them  to  his  own  business  with  a 
minimum  of  effort  and  cost. 

The  purpose  of  this  book  is  to  help  the  retail  merchant  to  find  an 


6. 


(( 


8. 
9. 

10. 


accurate  answer  to  that  problem  in  the  simplest  manner.  Therefore, 
practically  all  the  methods  have  been  illustrated  in  schedule  form. 
A  separate  form  or  schedule  is  devoted  to  each  step  in  the  work. 

Every  item  is  so  clearly  explained  either  in  the  schedule  or  the 
text,  or  both,  that  the  reader  can  adopt  the  methods  merely  by  sub- 
stituting his  own  figures  in  forms  similar  to  those  illustrated,  which 
he  can  readily  rule  to  suit  his  own  requirements. 

Thus  he  mil  have  available  for  ready  reference  and  for  comparison 
with  the  figures  of  previous  years  (or  of  other  concerns)  the  vital 
statistics  of  his  business  operations. 

Can  You  Tell  Your  Gross  Profits  and  Know  You  Are  Right? 

In  an  Atlantic  Coast  town  of  less  than  2,700  population,  located 
less  than  20  miles  from  a  much  larger  center,  there  is  a  department 
store  which  during  its  last  fiscal  year,  ended  March  1, 1920,  sold  almost 
$100,000  worth  of  goods.  Of  this  total  about  $35,000  worth  consisted 
of  groceries.  The  store  has  sent  me  several  interesting  letters  con- 
taining painstakingly  tabulated  year's-end  figures  of  various  kinds 
which  it  asked  me  to  analyze. 

I  here  present  one  of  these  letters  as  well  as  the  first  installment 
of  my  analysis  of  the  figures.  In  subsequent  chapters  I  shall  present 
other  letters  and  figures  of  this  store,  as  well  as  my  analyses  thereof, 
referred  to  hereunder. 

Four  Schedules  as  to  Gross  Profit  Exclusive  of  Discounts 

In  one  of  the  four  schedules  presented  herewith  I  have  employed 
some  of  the  store's  figures  to  illustrate  one  way  of  determining  its 
*' gross  profits."  A  way  to  test  the  correctness  of  that  "gross  profit" 
figure  is  shown  in  two  other  schedules.  In  the  fourth  schedule  I  take 
up  the  "gross  profit"  percentage  computations,  using  both  "cost  price" 
and  "selling  price"  as  a  basis. 

I  have  endeavored  to  make  these  schedules  so  clear  that  any  mer- 
chant can,  by  inserting  his  own  figures  in  the  place  of  this  store's,  com- 
pute his  own  gross  profit,  etc.,  and  then  test  his  computations  as  I 
have  tested  mine. 

I  use  this  technical  term  "gross  profit"  because  until  now  that 
is  the  term  which  has  been  generally  employed  to  distinguish  such 
"profit"  from  real  profit  or — as  it  is  termed — ^**net"  profit.  In  later 
articles  I  will  show  simple  ways  of  determining  such  profits. 

Keep  in  Touch  with  Value  of  Stock  on  Hand 

Some  merchants  know  how  much  stock  they  have  on  hand  only  just 
after  they  have  made  an  inventory,  or — as  some  term  it — ^an  "invoice" 
of  their  stocks.  More  progressive  merchants,  however,  are  not  content 
to  spend  most  of  the  year  in  the  dark  in  that  way.    Through  simple 


/ 


^  *. 


10 


Ketail  Profits,  Turnover  and  Net  Worth 


methods  they  can  tell,  at  a  glance,  the  value  of  the  stock  they  have  on 
hand  "at  any  moment." 

Unless  a  merchant  can  do  this,  that  is,  can  always  tell,  at  least 
approximately,  the  value  of  his  stock  on  hand,  how  can  he  keep  in 
touch  with  how  much,  or  how  little,  fire  insurance  (or  burglary  in- 
surance) he  requires!  How  can  he  be  certain  as  to  how  much  or  how 
little  merchandise  he  ought  to  purchase!  Or,  how  can  he  gauge  as  to 
when  to  increase  his  advertising  (or  to  **push"  certain  merchandise) 
so  as  to  decrease  his  stocks!  Hence  I  will  use  this  store's  statistics 
to  show,  besides  the  methods  already  mentioned,  how  you  can  arrive  at 
the  answers  to  the  questions  we  have  listed  on  this  page. 

Methods    Simple — ^Explanations    Clear 

The  questions  may  seem  formidable,  or,  to  put  the  matter  differ- 
ently, some  readers  may  think  that  the  preparation  of  such  statistics 
will  involve  an  undue  amount  of  work  on  their  part.  Hence,  note  that 
to  make  this  series  of  maximum  value  to  my  readers  my  methods  and 
explanations  will  be  made  so  simple  and  clear  that  any  merchant  will 
be  able  to  readily  adapt  any,  or  all,  of  them  that  he  needs— and  do  so 
without  an  undue  amoimt  of  extra  work  on  his  part.  Moreover, 
wherever  possible  I  will  show  at  least  two  ways  of  doing  the  same 
*' chore"  so  that  if  the  merchant  desires  he  can  test  the  correctness  of 

the  figures. 

Here,  then,  is  the  first  of  the  Atlantic  Coast  department  store's 

letters  above  referred  to : 

One  of  the  Store's  Letters 

**  herewith  find  figures  for  the  fiscal  year,  March  1, 1919,  to  March 
1,  1920.  Besides  two  men  and  two  lady  clerks,  we  employ  one  lady 
bookkeeper  who  works  only  in  the  office,  one  delivery  man  who  helps 
inside  when  not  delivering,  one  boy  who  works  only  evenings,  mornings 
and  Saturdays.  As  manager  of  the  store  I  look  after  the  buying,  adver- 
tising, *  credits,'  collections,  card  writing,  etc. 

**  About  four  years  ago  our  sales  totaled  between  $25,000  and 
$30,000  a  year.  Last  year  they  were  about  $100,000,  of  which  55  per 
cent  was  *cash'  business  and  the  remaining  45  per  cent  was  *  charge.' 

"I  feel,  therefore,  that  to  do  justice  to  our  growing  business  I  will 
have  to  make  others  responsible  for  certain  departments,  etc. 

**Will  you  kindly  make  up  a  profit  and  loss  account  and  such  other 
schedules  as  are  essential  to  a  comprehensive  analysis  of  the  following 

figures! 

**I  will  gladly  give  you  promptly  such  additional  information  as  is 

required." 

To  present  here  all  the  figures  the  store  sent  me  would  take  up  more 
space  than  can  be  spared ;  therefore,  I  shall  present  here  only  a  sum- 


Knowing  Where  You're  At  vs.  Groping  in  the  Dark  11 

mary  of  the  figures  sent  and  give  the  details  in  those  of  various 
schedules  in  which  they  belong.   In  other  words,  each  schedule  will  show 
all  the  figures  that  belong  therein,  whereas  here  I  give  only  such  as 
are  necessary  for  a  general  survey. 
Here  is  this  summary: 

Some  of  the  Store's  Figures 

Merchandise  on  hand  as  per  inventory  (cost  price)  March  1,  1919, 
$20,795.59.  Merchandise  on  hand  as  per  inventory  (cost  price)  March 
1, 1920,  $22,880.22.    Customers'  accounts  and  other  resources  March  1, 

1919,  $6,849.60.  Customers'  accounts  and  other  resources  March  1, 1920, 
$12,762.46.    Liabilities,  March  1,  1919,  $1,023.38;  liabilities,  March  1, 

1920,  $1,173.93;  merchandise  bought  during  the  year,  less  goods  re- 
turned to  wholesalers,  $81,716.52 ;  cash  discounts  deducted  from  above 
purchases,  $1,782.78;  merchandise  sold  during  the  year  (selling  price), 
$99,663.81.  From  these  sales  must  be  deducted  merchandise  returned 
by  charge  customers,  $1,204.31 ;  and  returned  by  cash  customers,  $479.88. 

g;iiiiiiiiiiiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiiiiiiiHiiiiiiiiiiiiiiiii 

I  (In  all  the  following  schedules   "bill-price"   means:     Wholesale  price  before       | 

I       deducting  cash  discount.)  § 

SCHEDULE  1  I 

Merchandise  Account,  Year  Ended  March  1,  1920. 

(Summary) 


Dr. 

Inventory  March  1,  1919 — 

(This  item  shows  the  value  of  the  goods  on  hand  at  the 

start  of  the  year  at  "cost  price") $20,795.59 

Purchases,  less  returns  to  wholesalers  (bill  price) $81,716.52 

Freight,  expressage,  etc.   (inward) 728.32 

(This  item  shows  the  laid-down-bill-price  of  the  goods  bought 
during  the  year) 82,444.84 

Total  Dr.  (gross-cost) $103,240.43 

Cr. 

Sales,  less  customers*  returns — 

(This  item  shows  the  selling-price  of  the  goods  bought  by 
customers  during  the  year) $97,979.62 

Inventory  March  1,  1920— 

(This  item  shows  the  value  of  the  goods  on  hand  at  the  end 

of  the  year  at  "cost-price") 22,880.22 

Total  Cr.   $120,859.84 

"Gross-profit"  (exclusive  of  cash  discounts).    See  also  foot  of 
Schedule  3   


$17,619.41 

In  the  following  Schedules  (2  and  3)  we  present  a  rough  analysis  of  the  store's 
"merchandising"  during  the  year  ended  March  1,  1920.  The  purpose  of  this  analysis 
1  is  to  "test"  the  correctness  of  the  "gross  profit"  amount  shown  at  the  foot  of 
I      Schedule  1. 

iiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiuiiiiiiiiiiiiiuiiiiiiiiiiiiiii 


12 


Betail  Profits,  Tnrnover  and  Net  Worth 


Hence  "net"  sales  were  $97,979.62.  Cost  of  mnning  the  business  (in- 
cluding depreciation  on  equipment,  but  not  including  bad  debts,  or 
** interest  on  investment,"  and  not  including  Federal  income  tax,  as  this 
was  paid  by  the  individual  partners  and  not  by  the  store),  $10,465. 
Loss  through  bad  debts,  $1,090.25:^'./^ 

To  Find  and  Test  the  Gross  Profits  Exclusive  of  Discounts 

To  enable  us  to  determine  a  store's  ** gross  profit"  for  a  given 
period  we  must  know  (a)  the  selling  price  of  the  goods  that  it  sold 
during  that  period,  and  (b)  the  cost  price  of  these  goods.  In  this 
case  the  store  reported  to  us  the  net  selling  price  of  the  goods  sold 
(after  deducting  customers'  returns,  etc.)  as  $97,979.62;  but  it  did  not 
report  to  us  what  those  goods  cost  the  store.  So  in  Schedule  2  we  make 
an  effort  to  determine  that  cost  figure. 


iwmwBBHiiimmmtiiiiiiiiHiiniiiiuuiiiiiiuiiHimiMiiiiiuiiiHiiHmiiiiiiiu 


nmntrnnntniuinininniiuiHiuMF' 


SCHEDULE  2 

Merc]uuidii6  on  band  at  the  start  of  the  year  (March  1,  1919),  as  per 
inventory    $  20,795.59 

Add :    Merchandise  Purchases  during  the  year,  less  returns  to  wholesalers 

(bill  price)    81,716.52 

Add:     Frdght,  eaq[>re8sage,  ete.   (inwrnrd) 728.32 

Gives:    Total  "Mdae."  to  be  accounted  for— 

(This  item  shows  the  '*laid-down-«oet-price''  of  the  merchandise  that 
ought  to  have  been  on  hand  at  the  end  of  the  year  if  nothing  had  been 
sold  or  otherwise  diq>osed  of  during  the  year) $103,240.43 

But,  according  to  tiie  inventory  taken  at  the  end  of  the  year  (March  1, 

1920),  the  cost-price  total  of  the  goods  then  on  hand  was  only 22,880.22 

Hence  (aside  from  the  goods  which  were  returned  to  wholesalers)  there 

must  have  been  sold  or  otherwise  disposed  of  during  the  year,  goods 

which  had  cost  the  store) $  80,360.21 

(Note — In  every  store  there  are  leaks  through  goods  "disappearing,**  being 
given  away,  broken  or  damaged,  etc.  The  cost  value  of  the  goods  which 
have  thus  "leaked  away"  is  included  in  this  amount— $80,360.21.  That  is 
why,  instead  of  saying  that  this  amount  represents  the  cost  price  of  the 
goods  that  were  sold  during  the  year,  we  must  say  that  this  represents 
the  cost-price  of  the  goods  that  were  sold  or  otherwise  disposed  of.) 


mimtiiniiittiiininiiniiiiitiininiii)MiiiuiiiiiiiiiiiiniinniiiHiiiiiiiiiiiiuii;iiiniiiiiiiiniiiiiinniiiiiiiMiiiiiintiiiniiiii!iitiiiiiiii^ 

Upon  examining  Schedule  2  my  readers  will  see  that  I  begin  it 
with  the  ''cost"  of  the  goods  that  the  store  had  on  hand  at  the  start 
of  the  year,  viz.,  $20,795.59;  and  to  that  amount  I  added  the  ''cost"  of 
the  goods  which  the  store  bought  during  the  year,  viz.,  $81,716.52,  as 
well  as  the  freight,  etc.,  thereon,  viz.,  $728.32.  I  did  this  in  order  to 
find  out  what  was  the  total  laid  down  cost  of  the  goods  which  the  store 
*' handled"  during  the  year.  This,  as  can  be  seen  in  Schedule  2,  was 
$103,240.43. 

The  next  thing  to  note  was  that  at  the  year's  end  the  store  had 
left  (as  per  inventory  at  cost  price)  $22,880.22  worth  of  goods.  Then, 
by  deducting  this  last  named  amount  from  the  $103,240.43,  as  I  did 


\ 


»* 


■  U 


A 


Knowing  Where  You're  At  vs.  Groping  in  the  Dark 


13 


in  Schedule  2,  I  learned  that  during  the  year  the  store  must  have 
disposed  of  goods  which  had  cost  it  $80,360.21. 


SCHEDULE  3 

Selling-price  of  the  goods  which  the  store  sold  during  the  year    (less 
deductions  for  customers'  returns) $  97,979.62 

Deduct:     The  cost-price  of  the  goods  that  were  disposed  of  during  the 
year  (as  shown  at  the  foot  of  Schedule  2) 80,360.21 

Leaves:     "Gross  profit"  (exclusive  of  cash  discounts).     See  also  foot  of 
Schedule  1  $  17,619.41 


In  Schedule  3  I  contrasted  the  selling  price  of  the  goods  sold  dur- 
ing the  year,  viz.,  $97,979.62,  with  their  supposed  cost  price,  as  shown 
at  foot  of  Schedule  2,  viz.,  $80,360.21;  and  thus  I  learned  that  the 
store's  ** gross  profit*'  for  the  year  (exclusive  of  cash  discounts)  was 
$17,619.41. 

In  projecting  this  series  I  determined  to  show  ways  of  testing 
various  results  obtained  in  setting  up  the  store's  figures.  Therefore, 
instead  of  taking  for  *'0.  K."  the  $17,619.41  gross  profit  shown  us  by 
Schedule  1  (which  contains  the  more  orthodox  method  of  determining 
** gross  profits"),  I  also  set  up  Schedules  2  and  3  and,  as  shown,  reached 
the  identical  result. 


iiiiiiiitujiitiuiuiiiiiiiiiiiiiiuiiiiiiiiiiiiiuiiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiiiiiiintiiniiiniininiiiiiiiiiiininniii^ 


SCHEDULE  4 

"Gross  Profit*'  Percentage  Ck>mputatioiis 

Upon  dividing  the  $17,619.41  by  $80^60.21,  we  find  that  during  the  jear  ended 
March  1,  1920,  the  store's  "gross  profit"  (exclusive  of  cash  discounts),  was  equal 
to  almost  22  per  cent  on  the  cost  price  of  the  goods  which  the  store  "disposed  or* 
during  the  year. 

Upon  dividing  the  $17,619.41  by  $97,979.62,  however,  we  find  that  during  the  year 
ended  March  1,  1920,  the  store's  "gross  profit"  (exclusive  of  cash  discounts)  was 
equal  to  18  per  cent  on  the  selling  price  of  the  goods  which  the  store  sold  during 
the  year. 


vwuiuiuHtimiiiniiiiiitiiniiiiitiiiMiniitiiiiitiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiii^  liiiiiiiitiiimiiiiiiiiiiiiiiiiiiiititiniiiiiiuiHuuuutiituuuiiijJiuuiimutH 

In  Schedule  4  I  show  briefly  how  to  figure  the  gross  profit  per- 
centage, using  either  the  co5^price  or  the  selling -i^yiqq  of  the  goods  sold 
as  a  basis.  Both  methods  are  essential.  Every  merchant  ought  to  be 
familiar  with  them. 


(*  I 


i  I 


CHAPTER  II 
Do  You  Know  Your  Net  Profits  and  Where  They  Went? 

IN  the  preceding  chapter  I  presented  a  noteworthy  communication 
from  a  department  store  in  an  Atlantic  Coast  town  of  less  than 
2,700  population,  located  less  than  20  miles  from  a  much  larger  center. 
The  letter  showed,  among  other  things,  that  the  store,  during  its  last 
fiscal  year,  ended  March  1,  1920,  sold  ahnost  $100,000  worth  of  mer- 
chandise, whereof  ahout  $35,000  worth  consisted  of  groceries. 

The  store  requested  me  to  analyze  the  year's  end  figures  which 
it  sent  with  the  letter,  so  as  a  first  installment  of  that  analysis  I  pre- 
sented four  schedules.  Therein,  using  two  different  methods,  I  showed 
that  the  store's  gross  profit  for  the  year,  eaxlusive  of  cash  discounts, 
totaled  $17,619.41  (or  18  per  cent  on  the  selling  price  of  the  goods  which 
it  sold  during  the  year). 

Gross  Profits  Including  Cash  Discounts 

In  Schedule  5,  presented  herewith,  in  our  Profit  and  Loss  summary 
for  the  year,  I  include  the  total  of  the  cash  discounts  which  the  store 
earned  during  the  period,  viz.,  $1,782.78.  By  so  doing  I  got  as  a 
total  **gain"  for  the  year  $19,402.19. 

Upon  dividing  that  amount  hy  the  store's  sales  for  the  year  (viz., 
$97,979),  I  find  that,  including  the  cash  discounts,  the  store's  (gross) 
profit  equaled  almost  20  per  cent  on  selling  price. 

From  the  $19,402  gain  in  Schedule  5  I,  of  course,  had  to  deduct  the 
store's  expenses  (including  losses  on  had  accounts) ;  these  as  shown 
in  detail  in  Schedule  5  totaled  $11,555.25.  By  so  doing  I  learned  that 
the  store's  net  profit  for  the  year  amounted  to  $7,846.94  (see  foot  of 
Schedule  5). 

Inward  Freight,  Etc.,  Is  Part  of  Merchandise  Cost 

It  will  he  noted,  however,  that  no  matter  how  carefully  anyone  of 
my  readers  may  study  the  expense  list,  in  Schedule  5,  he  will  not 
be  able  to  find  therein  an  item  referring  to  the  store's  outlays  for 
inward  freight,  expressage,  etc.,  on  the  goods  which  it  bought.  Upon 
examining,  however,  our  Schedules  1  and  2  which  appeared  in  the 
previous  chapter,  readers  will  find  that  therein  I  did  include,  as  a  part 
of  the  store's  merchandise  ** account,"  the  $728.32  that  the  store  paid 
out  during  the  year  for  inward  freight,  expressage,  etc. 

Here  are  a  few  of  the  reasons  why  I  treat  such  outlays  as  forming 
part  of  the  cost  of  the  goods  bought  and,  hence  as  merchandise  items : 

14 


»•/ 


.  J 

p"-h 

ll 

F  \ 

y 

\  1 

iU 

1 

Do  You  Know  Your  Net  Profits  and  Where  They  Went?      15     > 

„„,,,,,,,,,,,„,„,,,„,,,,,,,,,,,,,,,,,,,„„.uiiiiiiiiiiiiiiiniiiii ,,,ii,iiiiiiiiiiiiiiiiiiiiiiiiiiiii.iiiiiiiiiiiiiiiiiiiiiiiiiiiiniii»'i'i""'i»'""^^^^^^^^^^^^ 

SCHEDULE  5 

Profit  and  Loss  Summary 

Or. 

Gross  Profit,  exclusive  of  cash  discounts,  as  shown  at  foot  of  ^^^  ^^ 

Schedules  1  and  3 * ' "  '^l"  J' V ™fii ''»\*  "  ' 

(This  amount  is,  of  course,  the  "trading  net  profit.  ) 
Cash  Discounts  as  reported  to  me  by  the  store i.to^.tQ 

^  $19,402.19 

Total  Cr 

Dr. 

^Payroll  (including  $2,000  for  the  partner  who  manages  the 

b^siUrbut  not  iiicluding  wages  of  driver  of  delivery  ^^^^^ 

track;  see  next  item) '  ' 

mgJr^f  driver  of  truck  (who  also  seUs  goods  in  ^^  _ 

the  store)    ; • ifi*?*nn  1 

Depreciation  on  delivery  equipment !»»•""  | 

Other  delivery  expenses • ^^^  j  508.89  | 

y/  '720.00  I 

?P* .*.*.'.*.  .*.'. .     260.77  I 

i!}&^} 166.33  i 

Heat 427.10  I 

274.21                           1 

Advertising    ggg  67  1 

Paper  and  twine g^gg  | 

Sales  books  ,  ^^ .  ^  | 

Office  supplies ^-'ka  i 

Carried  from  previous  year "^'^^  | 

Total  supplies ••••••• ^^It'fn  I 

Lew  .-Unused  and  carried  over  to  new  year...     1^^.?»  ^^^^^  | 

397.39                           I 

Fire  insurance,  etc .*'.**  i   J            i«  s 

Mercantile  tax  and  water  rent  (this  does  not  P^lude  any  in-  j 

come  tax,  as  that  was  paid  by  the  partners  ^^dividimllyO  ^^  115.64                          j 

Phone   94*19  1 

Postage   20.10  I 

Laundry  101.78  i 

Incidentals    ;  •  • 07*00 

Donation  (Mdse.)  to  hospital ^'-^^  g^g^g 

Depreciation  on  store  equipment ;__ 

Total  of  expenses ^^?^090  25      '^ 

Add:  Loss  on  bad  accounts lyvvv.^o 

„      ,    ^  11,555.25       I 

Total   Dr _J | 

,      „  ,    ,  ,    Qx  $7,846.94       I 

1       Net  profit  (see  also  Schedule  8)  . . . . ...  ..;••••  •  •  ••••.;•,;; '  '  1 

I  (This  amount  is,  of  course,  the  "trading  net  profit.  )  | 

I, nSnISZE  mmmmmmmmmmm mmmmmmmmmmmmmmmmm .n.,.....................................F, 

In  Case  of  Fire  Loss,  Etc. 
If  a  mercliant  suffers  a  fire  loss  or  a  burglary  loss,  lie  can  claim 
from  his  companies  (and,  if  lie  has  sufficient  insurance,  he  ought  to 
obtain)  not  merely  the  original  price  of  the  goods  but  also  the  additional 
sums  which  he,  as  a  capable,  conscientious  merchant,  would  have  to  pay 
to  put  such  goods  back  where  they  were  when  they  were  destroyed  or 
burglarized. 


)! 


.4t; 


16 


Retail  Profits,  Turnover  and  Net  Worth 


Andy  broadly  speaking,  that  means :  (1)  If  the  market  (wholesale) 
price  of  the  goods  has  advanced,  the  merchant  is  entitled  to  claim  the 
advanced  price  and  not  merely  the  original  price  which  he  had  paid. 
(2)  If  to  replace  the  goods  to  advantage  the  merchant  must  purchase 
them  in  another  market,  he  can  claim  from  his  insurance  companies 
(a)  the  freight,  etc.,  which  he  will  have  to  pay  to  **land*^  the  goods 
on  his  counter;  (b)  the  buying  costs  (such  as  the  expenditures  for  rail- 
road fares  and  hotel  bills),  without  which  he  cannot  replace  the  goods, 
etc 

In  too  many  stores,  laying  down  costs  are  treated  as  ** Expense.*' 
That's  why  I  lay  emphasis  on  the  correct  method  of  treating  them,  viz., 
as  "Merchandise"! 

In  Schedules  6  and  7,  using  the 
store's  total  (net)  sales  for  the 
year  as  a  basis,  I  divided  each  ex- 
pense item,  etc.,  by  $97,979,  so  as  to 
determine  what  percentage  on  the 
store's  sales  for  the  year  its  ex- 
penses, etc.,  represented. 


Htmuuuiuiuiuuiiiuuuuiittiiiuiiuiiiuiuuiiiiuiiiuiiiiuiiuiiiiauuiiuiuuuuuiiwuiuuuiimimiuin 

SCHEDUUB  6  I 

m 

Expense  Percentage  (SununAry)       | 

St 

Payroll  (not  including  driver,  | 

but    including    $2,000    for  1 

manager-partner)  6%%     | 

Delivery    (including    pay    of  I 

driver  who  sells  in  store  be-  | 

tween  times) 1%%     i      M,„mau 

Bent,  light  and  heat 1%% 

Miscellaneous  expenses  includ- 
ing Supplies,  Advertising, 
Fire  Insurance  and  loss  on 
Bad  Accounts 2%% 


iniiiiiitiiiiiiiiiiiHiiiiiiiiii 


SCHEDULE  7 


uuuuuiiiintiiiiiiiiiiiiiiiiiHiiiin^ 


Total  of  expenses. 11%%     i  I 

M  1 

{The  percentages  in  Schedule  6  are     |  | 

hated  on  telling  price  of  the  goodt     |  | 

told  hy  the  ttore  during  the  year.)  |  | 


I  I  Total  Gross  Profit  (including 

I  I         cash  discounts) 19%% 

I  I     Expenses  11%% 

I  I 


Leaves:  Net  profit,  about. .     8     %      | 

(All  thete  percentages  [like  those  in  | 
8{^edule  6],  are  based  on  the  store's  | 
sales-total  for  the  year,)  I 

f^iiuuuiuuiiiHiiinuiHiiiiiiiiiuiiiiiiHHHiiiiiitiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiitiiiin         ^iiiiiiiiiiiiiiiiiiniiiiiitiiii iiiiiiiiiiiiiiitPiiMiiiiii|iiiiMiHmiimitmi'miitiiit»iimiHi'iii'iii»iiiiiiiiiiniim'i£ 

Increases  in  Resources,  Etc. 

In  Schedule  8  I  test,  in  two  ways,  the  correctness  of  the  result 
shown  at  the  foot  of  Schedule  5. 

As  can  be  seen.  Schedule  8,  ** agreeing  with*'  Schedule  5,  shows, 
in  two  places,  that  the  store's  net  profit  for  the  year  was  $7,846.94^ 
That  is,  in  this  instance  the  amount  at  the  foot  of  Schedule  5  (viz.,  the 
concern's  trading  profit)  and  the  amount  at  the  foot  of  Schedule  8  (viz., 
the  concern's  increase  in  net  worth)  tally  to  the  cent. 

Inasmuch,  however,  as  a  concern's  trading  might  show  a  net  loss 
(instead  of  a  net  gain),  and  since  there  are  conditions  under  which  the 
amounts  at  the  foot  of  Schedule  5  and  Schedule  8  might  not  tally,  I 
interpolate  here  certain  questions  and  answers  thereto  which  I  trust 
will  prove  helpful : 

Question  1.  Suppose  the  total  of  a  concern's  expenses  and  other 
losses  exceeds  its  profits,  thus  making  the  year  show  a  net  loss  instead 
of  a  net  gain,  how  wonld  that  affect  Schedule  5? 


I 


Do  You  Know  Your  Net  Profits  and  Where  They  Went?      17 

„.,„■„, ,.. -, , ,-N.» -- - ' — - :»- ' ' - '"" " ------| 


■^ 


a 


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iiiiiihiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii"'"!"'"'''"'''''''''""''"'"''"''''"''''"^ 


iiiiiiiiiiiiiiiiiiiiHiiiiiiiiiiiiiiiiiiiiiiniiiiiniiiiiiiiiuiiiiiiiiiiiiiiiniiiii>i>>>>>>' 


i 


Retail  Profits,  Turnover  and  Net  Worth 


Ans.  If  the  total  of  the  losses  during  the  year  is  larger  than  the 
total  of  the  profits,  the  foot  of  Schedule  5  instead  of  being  marked 
**net  profit  must  of  course  be  marked  **net  loss,"  accordingly. 

2.  Suppose  that  a  concern  makes  other  PROFITS  besides  those 
connected  with  its  trading?    Or, 

3.  Suppose  that  a  concern  has  LOSSES  not  directly  connected 
with  its  trading? 

Ans.  If  the  concern  effects  gains  or  suffers  losses  not  directly 
connected  with  its  trading,  these  gains  or  losses  should  be  shown 
separately  at  the  foot  of  Schedule  5 — after  the  trading  profit  (or  loss) 
has  been  clearly  indicated.  In  other  words,  for  various  reasons 
Schedule  5  should  clearly  indicate  separately  not  only  how  much  the 
concern  has  made  or  lost  through  trading,  but  also  how  much  it  has 
made  or  lost  in  other  ways. 

If  Foot  of  Schedule  5  and  of  Schedule  8  Don't  "Tally" 

4.  Snppose  that  the  amount  shown  at  the  foot  of  Schedule  5  (be 
it  net  gain  or  net  loss)  does  not  tally  with  the  amount  shown  at  the 
foot  of  Schedule  8,  would  that  mean  that  the  concern's  books  were  not 
correctly  kept? 

Ans.  The  answer  to  this  question  depends  on  the  circumstances. 
If  the  amounts  at  the  foot  of  the  two  schedules  do  not  tally,  it  ought  at 
least  to  be  possible  to  explain  every  cent  of  the  difference.     For 

example : 

a.  Perhaps  a  partner  (or  partners)  took  out  a  part  of  their  capital 

during  the  year. 

b.  Perhaps  a  partner  (or  partners)  invested  new  capital  during 

the  year. 

c    Perhaps  an  entirely  new  partner  was  taken  in. 

d.  Perhaps  the  concern  made  certain  profits  (or  suffered  certain 
losses)  which  it  ha^dled  in  such  a  way  as  to  affect  the  figures  in 
Schedule  8,  but  not  those  in  Schedule  5. 

If  after  taking  such  points  and  others  into  consideration  the  dif- 
ference between  the  two  schedules  cannot  be  explained,  then  one  of 
the  following  conclusions  might  be  in  order : 

The  books  have  not  been  correctly  kept. 

The  schedules  have  not  been  correctly  made  up. 

The  one  who  is  looking  for  the  error  (or  errors)  does  not  know 
how  to  ** reconcile"  the  figures. 

Schedule  8  makes  clear  that  though  the  store  started  the  year  with 
assets  totaling  only  about  $27,000  (and  liabilities  of  about  $1,000),  the 
managing  partner  could  show  at  the  year's  end,  i.  e.,  on  March  1, 1920, 
assets  that  had  increased  to  $35,642,  or  a  net  worth  of  $34,468.75. 
Besides  this,  Schedule  8  reveals  just  how  the  store's  net  profit  was 
reinvested  in  the  business  or,  in  other  words,  just  what  became  of 
the  almost  $8,000  which  the  store  made,  net,  last  year. 


f  u  ^ 


J 


/ 


Do  You  Know  Your  Net  Profits  and  Where  They  Went!      19 

To  account,  then,  for  this  gain  the  store  could  show  at  the  year's 
end  over  $4,000  more  cash;  over  $1,000  more  due  from  customers; 
about  $2,000  worth  (cost  value)  more  merchandise;  and  a  delivery 
equipment  value  increase  of  $700.  Against  these  gains  there  is  to  be 
noted,  of  course,  as  shown  in  Schedule  8,  a  decrease  of  store  equip- 
ment value  of  $100  and  an  increased  indebtedness  to  wholesalers  of  $150. 

In  the  next  chapter  in  this  series  I  hope  to  be  able  to  use  this  store's 

figures  to  show : 

How  to  determine  the  value  of  the  stock  on  hand  at  any  time ; 

How  much  the  store's  stock  amounted  to  during  the  year  at  its 
highest  (and  at  its  lowest)  level. 

How  much  the  store 's  average  stock  for  the  year  amounted  to. 

How  often  the  store  turned  its  merchandise  during  the  year,  etc. 


f 


CHAPTER  III 

Simple  Schedule  Shows  Vital  Facts  of  Your  Business 

TN  the  first  chapter  of  this  series  I  stated  that  the  store,  during  the 
I'lwdvfmonfts  ended  March  1,  1920,  sold  nearly  ^lOO-^J^J^  ,f 

goods,  whereof  $35,000  worth  consisted  f  .g'-^^X^;  ^  ^^tSftl^^ 
emDloving  different  plans,  I  demonstrated,  in  Schednles  1  to  4,  that  the 
swH^ot  profit  for  the  year,  exclusive  of  cash  discounts,  totaled 
^17  619  (or  18  per  cent  on  selling  price).  _ 

*  In  the  second  article  of  the  series,  efPlf-g/f^^fiT^J^Keai 
showed,  in  Schedules  5  to  8,  that  the  store's  net  Vvo&tiov  i^ej^v 
totaled  $7,846.94  (or  about  8  per  cent  on  the  selling  price  of  the  goods 

"'^t%terfaS!''hord  tlso  that  inelu^i.,  the  cash  dU. 
counSthI  stoTe's  gross  profit  was  $19,402;  that  its  e:j-ses  tota^^ 
about  $11,555;  and  that  its  -t  profit  for  the  ^J- -;e^s  sdes'ftr^he 
Bividinff  these  various  amounts  by  $y/,y/y,  lue  sioie  a  »axco 
velfl  showed  that  the  store's  gross  profit,  jf  «f-^  .<^«i^— 3*^ 
averkeed  about  20  per  cent  on  seUing  price;  that  the  store  s  expenses 
Xled  abou?  12  pe?  cent;  hence  its  net  profit  was  abo-t  8  per  cent  on 
the  selling  price  of  the  goods  the  store  sold  during  the  year. 

Here  in  Schedule  9, 1  list,  month  by  month,  the  store's  purchases 
„.^  .Z:  for  the  year     In  the  schedule  I  also  show  the  approximate 

mine  that  the  store,  during  the  year,  earned  an  average  stock  whose 

cost  price  ^^?i«  ^^"^IgT^fi^re"  as  a  basis  I  found  that  th^  stoiie 
.HuS^ravfaSstocfJbout  three  and  a  half  times  during  the 

^%Ms  "turn"  ^^o^^l^^lff:^^^^^^,  S^SfnTtE 
S  ^"'  fTZ^ZZLliieLL^S^  common  method  of  dividing 
Z'sSuLX  Se  store's'ales  for  the  year  by  the  co.t-pri^ce  o 
Se  ^3t  oTstock  with  which  the  store  merely  started  the  year.  If 
T  LTeSoved  that  method  of  figuring  I  would  have  said  that  the 
stote"SSed'' its  "merchandise"  nearly  five  times  durmg  the  yeari 

20 


Simple  Schedule  Shows  Vital  Facts  of  Tour  Business 


21 


J 


What  Schedule  9  Teaches 

In  taking  so  mnch  pains  to  *'get  up"  Schedule  9  I  had  in  mind  not 
only  the  listing  of  the  store's  figures,  so  my  readers  could  use  them  for 
comparison  purposes,  but  also  enabling  each  of  my  readers  to  prepare 
such  a  schedule  for  himself  so  he  can  learn  at  any  time  how  much  stock 
he  has  on  hand;  how  much  fire  insurance  «r  burglary  insurance  he  may 

gnHiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiHiiiiniiii III! iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiiiinn-iiniiiniiHinniiniiiii'i"'"!""""'"^^        ,,,,,,,,,.n,,,,,.i,,,,..ii,iiii.iii.iiiiiiiiii.ii.ii.i.iiiiniiiiniiiiin.iiiHi»^^^^ 


SCHEDULE  9 


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JJTJc 


^ 


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^.^t   m 


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,,,,,,,,,,,,i,iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiHiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiuiiiiiiiiiiiH  iiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiuiiiiiiiiiiiuHuiiiiiiiiiiimniiua 


• 


'\ 


22 


Betail  Profits,  Turnover  and  Net  Worth 


require ;  how  his  purchases  and  sales  for  the  period  thus  far  compare 
with  those  of  the  corresponding  period  during  previous  years ;  how  his 
stock,  then  on  hand,  compares  with  that  which  was  on  hand  at  the  cor- 
responding date  during  previous  years;  and,  hence,  whether  he  is  (ap- 
parently) buying  too  heavily  or  not  heavily  enough;  or  whether,  for  one 
reason  or  another,  he  ought  to  pursh  certain  kinds  of  mercfia/ndise,  in^ 
order  to  bring  the  sales  up  to  the  proper  mark,  etc. 

Most  of  these  things  Schedule  9  can  tell  a  merchant  practically 
at  a  glance.  Common  sense,  based  on  experience,  will  help  him  to 
determine  the  remainder.  For  Schedule  9  will  aid  by  telling  him  the 
approximate  cost  of  the  goods  that  are  being  sold;  the  number  of  times 
the  stock  is  being  turned,  etc. 

Simplicity  of  Method 

As  can  be  seen,  at  the  foot  of  Schedule  9, 1  mention  that  by  adding 
the  figures  on  each  line  in  his  column  1  to  the  figures  on  that  same 
line  in  column  2,  the  merchant  can  obtain  his  figures  for  column  3. 

Again,  I  said  that,  by  deducting  from  the  figures  in  column  4  of 
Schedule  9  those  figures  that  appear  in  its  column  5,  the  merchant  can 
get  the  figures  for  column  6.  Then,  to  start  the  **next''  line,  I  said: 
From  the  figures  in  column  3  deduct  the  figures  in  column  6,  and  thus 
get  your  figures  for  the  next  line  of  column  1. 

To  express  the  method  in  even  simpler  language,  let  me  state 
that  to  start  the  schedule  I  entered  on  the  first  line,  in  column  1,  the 
cost  price  of  the  goods  with  which  the  year  started,  viz.,  $20,795. 

Next  to  that  amount  I  entered,  in  column  2,  the  cost  price  of  the 
goods  bought  during  the  first  month,  viz.,  $6,022. 

By  adding  these  two  amounts  I  learned  that,  if  no  goods  at  all 
had  been  sold,  there  ought  to  have  been  on  hand,  at  the  end  of  the 
first  month,  $26,817  worth  of  goods  (cost  price). 

But  during  the  first  month  there  were  sold  $6,271  worth  of  goods 
(selling  price) ;  hence  I  entered  that  amount  (on  the  first  line)  in 
column  4. 

Base  Percentage  on  Own  Experience 

Now  we  come  to  the  first  step  about  which  the  merchant  must  do 
a  little  careful  thinking  in  order  to  prepare  ** Schedule  9''  for  his  own 
business.  Each  merchant  must  know  from  past  experience  what  per- 
centage on  selling  price  his  gross  profits  have  averaged  and  thus  be 
able  to  determine  what  percentage  they  are  likely  to  average  'Hhis'' 

year.  . 

In  this  particular  case,  by  going  over  the  store's  figures,  1  learned 
that  its  gross  profits  for  the  year,  excluding  cash  discounts,  were  about 
18  per  cent  on  selling  price.  In  another  store,  however,  the  percentage 
may  be  less  or  much  more.  Hence  I  cannot  tell  a  merchant  just  what 
percentage  he  must  use.    That  he  must  determine  for  himself,  with  the 


.•»r 


, 
i 


Simple  Schedule  Shows  Vital  Facts  of  Your  Business         23 

aid  of  his  accountant  or  otherwise.  As  stated,  in  this  case  the  per- 
centage to  be  used  happened  to  be  18,  so  I  made  the  necessary  com- 
putation and  found  that  18  per  cent  on  $6,271  (the  selling  price  of  the 
goods  which  were  sold  during  the  first  month)  was  $1,128,  and  that 
amount  I  entered  on  the  first  line  in  column  5,  as  the  approximate  gross 
profit  for  the  first  month. 

Carry  Forward   from  Line  to  Line 

It  was  a  simple  matter  then  for  me  to  deduct  the  $1,128  from  the 
$6,271  and  get  $5,143  as  a  remainder.  This  I  entered  on  the  first  line 
in  column  6  as  the  **cost  price  of  the  goods  which  were  sold"  during 

the  first  month. 

Now  I  was  ready  to  start  the  second  line.  So,  from  the  $26,817 
in  column  3  (the  total  of  the  goods  which  would  have  been  on  hand  if 
nothing  had  been  sold)  I  deducted  ** column  6,"  the  cost  of  the  goods 
which  were  sold,  viz.,  $5,143 ;  and  thus  I  learned  that  there  was  on  hand 
to  start  the  second  month  approximately  $21,674  worth  of  goods  (cost 

price). 

Step  by  Step 

Step  by  step  I  continued  the  work,  finding  (a)  each  month's  ** ap- 
proximate'' gross  profit;  and  (b)  the  cost  price  of  each  month's  sold 
goods.  Thus  I  learned  that  at  the  end  of  the  year  there  should  have 
been  on  hand  $22,880  worth  of  goods.  This,  as  those  of  my  readers 
who  have  read  the  previous  chapters  know,  is  the  amount  which  the 
store  did  have  on  hand,  at  cost  price,  at  the  year's  end,  viz.,  on  March 

1, 1920.  X  ,  . 

Of  course,  I  was  able  to  get  the  exact  result  because  I  knew,  tti 
advance,  the  precise  percentage  of  gross  profit  which  the  store  had 
made.  It  is  hardly  to  be  expected  that  every  merchant  who  uses  this 
system  will  be  able  to  come  so  close  to  the  final  result  as  I  did  in  this 
instance.  Several  merchants  to  whom  I  have  recommended  this  method, 
however,  have  told  me— after  employing  the  plan  for  years— that  they 
have  been  gratified  by  the  accuracy  with  which  through  *' Schedule  9" 
they  have  been  able  to  estimate  their  stock  on  hand.  The  difference 
between  the  amount  of  stock  they  expected  to  find  on  hand  and  what 
they  actually  found  was  notably  small,  they  gratefully  assured  me. 

Schedule  9  Method  Can  Be  Applied  to  Weeldy  and  Even  Daily 

Stock  Estimates 

It  will  be  noted  that  in  Schedule  9  I  have  used  month's  figures 
only.  It  stands  to  reason,  however,  that  Schedule  9  can  be  employed 
for  week's  end  figures,  or  even  for  daily  figures.  In  other  words,  by 
using  the  method  in  Schedule  9  a  merchant  can  keep  in  touch  with  his 
approximate  stock  on  hand,  estimated  profits,  etc.,  either  monthly  or 
weekly,  or  twice  weekly,  or  even  daily,  if  he  deems  it  advisable. 


^ 


24 


Eetail  Profits,  Turnover  and  Net  Worth 


It  will  be  noted,  too,  that  Schedule  9  shows  us  that  at  no  time 
during  the  year  was  the  cost  value  of  the  stock  on  hand  as  low  as  the 
amount  with  which  the  year  was  started.  The  next  **low"  amount 
was  the  valur  of  the  stock  on  hand  at  the  start  of  the  fourth  month, 

viz.,  on  June  i — $21,463.  , .  ,.  ti 

The  highest  amount  of  stock  on  hand  was  that  with  which  Decem- 
ber was  started,  viz.,  $26,346.  . 

Now  as  to  purchases;  the  heaviest  purchases  were  made  during 
October  and  December,  1919,  in  each  of  these  months  the  purchases 

being  about  $8,440.  .,.-..      T^         u 

As  to  the  sales,  as  can  be  seen,  these  were  highest  durmg  December, 
the  next  best  months  being  November,  August  and  May. 


:ii| 


JH 


A 


\ 


CHAPTER  IV 
This  Test  Shows  Whether  Your  Books  Were  Kept  Right 

THIS  chapter  is  the  fourth  in  my  series  based  on  the  figures  for  the 
year  ended  March  1,  1920,  of  an  Atlantic  coast  store  in  a  town  of 
less  than  2,700  population,  located  about  20  miles  from  a  much  larger 

in  the  first  of  these  four  articles  I  showed  that  during  the  twelve 
months  the  store's  sales  amounted  to  about  $100,000,  whereof  about 
$35,000  worth  consisted  of  groceries.  Moreover,  employing  different 
methods,  in  Schedules  1  to  4, 1  demonstrated  that,  exclusive  of  its  cash 
discounts,  the  store's  gross  profit  for  the  year  totaled  $17,619  (or  18 

per  cent  on  selling  price).  ,  ,,    .   .    t   -,•      -x        i. 

In  my  second  article  of  the  series  I  showed  that,  including  its  casn 
discounts,  the  store's  gross  profit  for  the  year  amounted  to  $19,402  (or 
about  20  per  cent  on  selling  price).  In  that  same  article,  m  Schedules 
5  to  8,  I  listed  the  store's  expenses,  etc.  And  I  showed  that,  sm^ 
these  expenses,  etc.,  totaled  about  12  per  cent,  the  store's  net  profit 
for  the  year  ($7,847)  averaged  about  8  per  cent  on  the  seUmg  price  of 
the  goods  which  the  store  sold  during  the  year.  ^  ,  ^  ,  ^  ^  . 

In  the  third  chapter  of  the  series,  in  Schedule  9,  I  tabulated  for 
various  purposes  the  store's  purchases,  sales,  ^^estunated"  gross  profit, 

etc.,  month  hy  month,  x  i.  i  x^ 

One  purpose  was  to  show  how  a  merchant  can  readily  so  tabulate 
his  own  figures  as  to  be  able  to  tell  at  any  time  how  much  his  stock  on 
hand,  etc.,  amounts  to.  Another  purpose  was  to  determme  how  much 
the  ''average  stock"  which  the  store  carried  during  the  year  amounted 

I  wanted  that  average  stock  figure  to  enable  me  to  determine  how 
many  times  the  store  ''turned''  its  stock  during  the  twelve  months. 
Through  Schedule  9  I  found  that  the  **cost  price"  of  the  store  s 
** average  stock"  for  the  year  amounted  to  about  $23,298;  and  then,  by 
dividing  that  sum  into  $80,360  (the  cost-price  of  the  goods  which  the 
store  sold)  I  learned  that  the  store  turned  its  *' average  stock"  about 
three  and  one-half  times  during  the  year.  ^    ,        .^  ,x 

I  here  present  additional  schedules.  Therem  I  show  the  results 
of  a  test  to  which  I  have  put  this  Atlantic  Coast  store's  figures  in  order 
to  determine  whether  there  was  on  hand  on  March  1, 1920,  that  amount 
of  "cash"  which  the  store  then  should  have  had  on  hand  (if  all  of  the 
various  figures  it  sent  to  me  were  correct) . 

25 


26 


Eetail  Profits,  Turnover  and  Net  Worth 


riiiiiiiiiiiiiiiiiiiiiiiwiiiiinmtiiiitii'iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiHiiiiniiiiiii!mitiiiiiiiiiniiiiiiiii'ui| 


i 


3 
1 


nimiiiiimiiiinimnnniiinmimtmmHiimmnmfmiimiimiimtimiiiffliimiiniiimiinnniiiiiiiniinniin 

SCHEDUIiE  10 
Cash  Payments  ( Synopsis)  ^Year  Ended  March  1,  1920 

Merchandise  purchasee,  lew  returns  to  wllere. .  —  ••••••:•;•  •®l'J!lSSo 

ADD:  Amount  owed  to  eeUers  at  the  START,  March  1,  1919      l/>23.38 

GIVES:  Amount  which  the  store  would  have  paid  for  ff^*„^^^^ 

S  it  had  paid  all  the  bins,  AS  RENDERED $82,739.90 

But,  at  the  year's  end,  the  store  still  owed  $1,173.93. 

DEDUCT:  Amount  owed  to  sellers  on  March  1,  1920 ^»^^^-^^ 

LEAVES:  Face  amount  of  bills  (for  goods)  which  the  store 

aetUed   y-^i/li'  ^^^-^^ 

But  before  paying  these  bills  the  store  "took  on     the 

discounts,  hence                      ,  ^     ^v     _*  -^  i  tb9  7ft 

DEDUCT :  Cash  discounts  earned  by  the  store i^iJiajo 

Leaves :  Amount  actually  paid,  during  the  year,  for  GOODS ^^^'J|«  Jo 

Inward  freight,  expressage,  etc     Payments '^^'^ 

DeUvery  equipment     Payment i^A^ASon 

Expenses  for  the  year  toUled. • .-  •  •    ...  110,465.00 

But  this  total  included  the  foUowing:  Depreciation  on 
delivery  equipment,  $165;  depreciation  on  store  eouip- 
ment,  $100;  supplies  that  had  been  carried  over  from 
the  previous  year  and  therefore  were  not  paid  for  this 
year,  $66.50.  Hence  we  must 
DEDUCT    ^^^'^^ 

LEAVES    : •• #10^33.50 

But  the  store  did  spend  $123.70  this  year  for  some  sup- 
pties  which   (because  they  were  not  used)   it  did  not 
include  in  the  $10,466.00;  hence 
ADD    ^^^'^^ 

GIVES:  Aetaal  cash  paid-for  expenses 10,257.20 

Total  of  the  store's  cash  payments  during  year  ended  March  1,  1920. . . .  $91,633.71 

,miiiiiiiiiini.mi.iiii)iiii!iimiu.iiiiiiiiiii.iiiiiiiiiiiiuiniinii:HmiiiB^^  •iniiiiiii.i.ii.iinini«i.i!i..i.7i 

:«j„,,i.,iiniiH.i.iii.ii«.iiiniiiiiimi«n.iiiii— mniinn—  iiniimn«niiiiiiiii| 

SCHEDULE  11 
Cash  Income  (Synopsis)— Y^ear  Ended  Umrth  1,  1930 

Sales  for  the  year,  less  customers'  returns. . . .  ....•••  •/••••;• '  :x:^{ ' '  ^^I'ss?  05 

ADD:  Indebtedneis  of  customers  at  the  year's  8TABT  (March  1,  1919) .  ■       4,555.25 

Hence:  If  all  customers  had  ''paid  up"  in  full  the  store  would  have  "««^-^j^^2,534.87 

1,090.25 


SStlLfTst^Z'aWoiiiiti;;^^^               $1,090.25,  "went  bad";  hence 
DEDUCT:  Bad-debts  written  off ^ 


I 

3 


Again,  «t '  the  "!««•»   END   "good"   eoBtoraera   itiU   owed   the  store 

t5,«78.02;  henee: 
DEDUCT:  Indebtednese  of  eustomere  (M»reli  1,  19Z0) 


$101,444.62 


9 


ti 


/ 


5,678.02 


LEAVES :  Amdunt  really  "coUected"  from  customers $95,766.60 

Inasmuch  as  there  were  no  other  cash-takings,  this  amount  represents  the  store's 
•ntire  cash  income  for  the  year  ended  March  1,  1920. 


IHflHIIHWHHIIIIItlllHHIIIIUHIHIIIUIHIII 


inii««iiiHiiuHiimHiiiiuiiiiiiiiiiiiiiiiiiimiiiiiiiiiiiiniiiii"iii'"iiiiiiiiiniiiiiiiHHiiiiniiiiiiiiii"'ii"'" ' iiiiiiiiiiiiiiiinninniimnniiiiimnnittittiiniiimiimS 


This  Test  Shows  Whether  Your  Books  Were  Kept  Right      27 

In  other  words,  whereas  in  my  previous  schedules  I  have  had  to 
set  up  the  various  figures  without  particular  regard  to  how  they  affected 
the  store's  *^Cash  Account,"  this  time  rttj  main  purpose  is  to  ** audit" 
all  of  those  figures  in  the  store's  report  to  me  which  have  a  bearmg 
on  the  handling  of  its  cash. 
-Here  is  this  report: 

Figures  Store  Included  in  Its  Report 

Merchandise  on  hand  as  per  inventory  (cost  price)  March  1, 1919, 
$20,795.59.  Merchandise  on  hand  as  per  inventory  (cost  price)  March 
1, 1920,  $22,880.22.  Customers' accounts,  March  1,1919,  $4,555.25.  Cus- 
tomers' accounts,  March  1,  1920,  $5,678.02.  Other  resources,  March  1, 
1919,  cash,  $1,427.85 ;  supplies,  $66.50 ;  store  equipment,  $600.00 ;  delivery 
equipment,  $200.00.  Other  resources,  March  1,  1920,  cash,  $5,560.74; 
supplies,  $123.70 ;  store  equipment,  $500.00 ;  delivery  equipment,  $900.00. 
Merchandise  liabilities,  March  1, 1919,  $1,023.38 ;  merchandise  liabiUties, 
March  1, 1920,  $1,173.93 ;  merchandise  bought  during  the  year,  less  goods 
returned  to  wholesalers,  $81,716.52 ;  cash  discounts  deducted  from  above 
purchases,  $1,782.78;  merchandise  sold  during  the  year  (selling  price), 
$99,663.81.  From  these  sales  must  be  deducted  merchandise  returned 
by  charge  customers,  $1,204.31 ;  and  returned  by  cash  customers,  $479.88. 
Hence  **net"  sales  were  $97,979.62.  Cost  of  running  the  business  (in- 
cluding $165.00  for  depreciation  on  delivery  equipment  and  $100.00  for 
depreciation  on  store  equipment;  but  not  including  bad  debts,  or  ** in- 
terest on  investment,"  and  not  including  Federal  income  tax  as  this 

was  paid  by  the  individual  partners       g,,|,i,|||,,iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiin!iiiiiiiniiiniiiiiiiinmiiiiinmiiinniiiiii«iiiiiniii!niiiimHiinnH 

and  not  by  the  store),  $10,465.   This  |  | 

amount,  ^however,  includes  $66.50  |  soHEDtLE  la  | 

worth  of  supplies  carried  over  from  |  cash  Account  (smnmaJr)  | 

the  previous  year.    It  does  not  in-  |  Yeaj-  Elnded  Marth  i,  loao  | 

elude    $123.70    worth    of    supplies  |  ^r-  | 

,  ,  ,  1  1     i  i.^      §       Cash  in  bank  Marcn  l,  = 

which  we  are  able  to  carry  over  to     |  jgig  $  i,327.85     | 

next  year.   Loss  through  bad  debts,    |     ^ash^  on^  hand  March  i,      ^^^^     | 
$1,090.25.       Delivery       equipment    |     cash,  income*  'duViig  the  | 

bought  (net)     $865  00  |  gJf^Uf  Schedule  ll  95,766.60       | 

In  Schedule  10,  therefore,  I  am  |  j 

able  to  show  that  (if  all  the  figures  |  Total  Dr $97,194.45  | 

it  sent  me  are  correct)  the  store  |  J^dn  *  I 

must    have    **paid    out"    during  |  ^  thJ**^r?       """^  i 

the    year,    in    all,    $91,633.71    in  |  See  foot  of  Schedule  lo  9i,633.7i  | 

.y  , ,    '  '  I       Hence,   amount   of  cash = 

**casn."  I  that    ought    to    hare 

In  Schedule  11  again  I  am  able    |        been  in  bank  and  on 

1  xi_    i.    /'i?      11    4.1,      «««,^^.«   U      i  band    March    1,    1920 

to  show  that  (if  all  the  ngures  it    |         (^^^  ^hen  was  so  in 

sent  me  were  correct),  the  store    |        bank  and  on  i^a^^),  | 

....  Ill         •  3  wa.8 .9   D,ODU.  I*  = 

must  have  ' '  taken  in "  m  all  during    i  | 

the  year,  in  *  *  cash,     $95,766.o0.  itiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiniiMttiiiniimntnttiiiiiu^ 


28  Retail  Profits,  Turnover  and  Net  Worth 

Hence,  in  Schedule  12, 1  am  ahle  to  show  that,  everything  else  being 
correct,  since  it  started  the  year  with  a  **cash  balance"  of,  in  all, 
$1,427.85,  the  store  ought  to  have  had  on  hand,  at  the  year's  end,  a  cash 

balance  of  $5,560.74.  uv  ^i,^ 

This  amount  (as  can  be  seen  m  Schedule  8)  really  tallies  with  tne 
amount  of  cash  that  the  store  reported  to  me  as  on  hand  at  its  year's 
end,  that  is,  on  March  1, 1920. 

As  to  Storeys  Average  Cash  Discount  Percentage 

In  Schedule  10  I  show,  too,  that  the  face  amount  of  the  bills  (for 
goods)  which  the  store  settled  during  the  year  amounted  to  $81,565. 
I  also  show  that  in  paying  these  biUs  the  store  deducted  cash  discounts 
totaling  $1,782.  Therefore,  in  Schedule  13  I  am  able  to  show  that  the 
store's  cash  discounts  during  the  year  averaged  about  2  1/5  per  cent 
on  the  **bill  price"  of  the  goods  that  it  paid  for. 

jiiinnuinnniinniiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiiiiiinnninni^ 

SGHEDUIiE  18 


a 
I 


Upon  dividing  $1,782.78  (the  total  of  the  store's  cash  discounts  for 
the  vear)  by  $81,565.97  (the  face  amount  of  the  merchandise  bills  which 
the  store  settled  during  the  year),  we  find  that  the  store's  cash  discounts 
averaged  about  2  1-5  per  cent  on  the  cost-price  of  the  goods  involved. 


i 


Inmnninniiiiiiinuninimniiniiiwiuuiuiniiuiuiiiiii •■•iinuinniinniiiiiiimiHi ,,.,i..,....iiiiwiiiiiiiiiiiiiiiiiiiiiinuiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiiiini         iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiinnininninnni..^ 

In  Schedule  9  I  showed,  among  other  things,  the  dollars  and  cents 
cost  of  the  Purchases— and  the  dollars  and  cents  selHng  price  of  the 
sales— which  the  store  made  during  each  month  of  the  7®^^; ^  J  ^7^^^®^ 
there,  too,  that  the  purchases  totaled  (at  cost  price)  about  $82,445  and 
that  the  sales  totaled  (at  selling  price)  about  $97,979.   ,    ^  ^    .    .    , 

Note  that  in  the  $82,445  (total  of  the  purchases)  I  had  to  mclude 
the  $728.00  which  were  paid  for  inward  freight,  etc. 

Each  Month's  Share  of  Purchases  and  Sales 

Here  therefore,  to  supplement  those  monthly  purchases  and  sales 
figures,  I  present,  in  Schedule  14,  a  list  indicating  what  percentage 
of  the  entire  year's  purchases— and  what  percentage  of  the  entire  year  s 
saleB—each  month's  transactions  represented. 

That  is  to  say,  counting  the  entire  year's  purchases  as  100  per  cent, 
I  divide  each  month's  purchases  by  the  $82,445 ;  I  thus  learn  what  share 
of  the  entire  year's  total  each  month's  purchases  represented. 

How  the  Monthly  Percentages  Were  Computed 

For  example,  the  purchases  of  March,  1919  (as  I  showed  in  Schedule 
9)  were  $6,022.  Upon  dividing  this  amount  by  the  $82,445  I  get  as  a 
quotient  about  7  3/10.  So,  in  Schedule  14, 1  show  that  the  March,  1919, 
purchases  represented  about  7  3/10  of  the  year's  total. 


I 


I 


\ 


i 


i^' 


•  h 


;* 


J 


• 


This  Test  Shows  Whether  Your  Books  Were  Kept  Right      29 

Next  I  take  the  purchases  of  April,  1919,  which  (as  I  showed  in 
Schedule  9)  was  $6,894.  I  divide  this  amount  by  the  $82,445  and  thus 
I  find  that  the  April,  1919,  purchases  represented  about  8  4/10  per  cent 
of  the  year's  total,  and  I  list  the  item  in  Schedule  14  accordingly.   And 

|iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii"iiiii""i"«''""»"'""^        ^^  ^^  *^^  ^^^  otner  montns. 

I  I  Similarly  I  handled  the  sales 

scHEDUiiE  14  j     figures  for  Schedule  14.    The  sell- 

Showing  each  month^s  share  of     |     ing  price  of  the  goods  sold  during 

I      the  Total  Purchases   and  Total      |      March,     1919      (aS     I     showed     in 

I     1^1920^.'''^^  ^^'"  ^''^^  ^^"^     I     Schedule  9),  totaled  $6,271.    Count- 
I       '        '  Percentage        |     ing  the  selling  price  of  the  entire 

I                                       Purchases  Sales       |      ^^^^y^    g^j^g    ($97,979)    aS    100   per 
I      March,  1919 7»  OJ      |      ^^^^^    j    ^.^^^    ^^^    ^^^71    by    the 

^J^^  74  gr  I  $97,979 ;  thus  I  find  that  the  March, 

I     Ji^      .!!.!.....    8«  7"  I  l^l^>  s^^s  represented  about  6  4/10 

I     July  !!..!!!.!!...    9*  T*  I  P^^  ^^^^  ^^  ^^®  total  for  the  year 

I     Aug. 9^  9  1  and  I  enter  the  item  in  Schedule  14 

I     Sept  7»  ?•  I  accordingly;  and  so  on  for  each 

Oct 102  g«  I  other  month's  sales. 

Nov 9«  9       I 

Dg^j 102         12*     I  Valuable  for  Comparisons 

j     January,  1920  . . . .    6»         8^     I  ^^^^  ^  schedule  (as  Schedule 

I     ^®^ ••    ^^ I     14)  containing  as  it  does,  compara- 

i  Total           . .  .100%     100%  I  *iv^l5^  speaking,  only  a  few  figures, 

I  I  can  readily  be  prepared  by  each 

I  The  smaUer  figures  in  this  |  store  at  each  year's  end  and  may 

!  ^^l  represent  tenths  of  1  |  ^^^^^  j^-^j^^  serviceable  in  making 

I  j     comparisons. 

iiiiiiiiiiiiiiiiiiiiiiiiiiii nil iiijiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiniiiiiniiiiiiiiiiiiiininiiiiniiiiini  xjp  to  tMs  poiut,  as  my  readers 

have  noted,  all  the  figures  I  have  scheduled  in  this  series  have  been 
based  on  the  store's  business  as  a  whole. 

In  the  concluding  chapter  of  this  series  J  purpose  to  tabulate, 
in  as  comprehensive  a  manner  as  practicable,  figures  for  each  depart- 
ment in  the  store.  That  is,  I  will  give  details  as  to  the  kind  of  mer- 
chandise carried  in  each  department;  the  amount  of  stock  with  which 
each  department  started  and  ended  the  year ;  the  total  of  each  depart- 
ment's  purchases  and  sales;  each  department's  gross  profit,  etc. 


t    f 


CHAPTER  V 

How  to  Find  the  Weak  Spots  in  Your  Merchandising 

THIS  is  the  fifth  installment  of  my  analysis  of  the  figures  for  the 
year  ended  March  1,  1920,  of  an  Atlantic  Coast  store  located  in  a 
town  of  less  than  2,700  population,  about  20  miles  from  a  much  larger 
center. 

Previous  Chapters  '•Reviewed" 

The  store's  gross  profit  for  the  y^diT,  exclusive  of  its  cash  discount 
(as  can  be  seen  in  Schedule  17),  totaled  $17,619,  or  18  per  cent  on 
selling  price.  These  figures,  be  it  noted,  furnish  added  proof  of  the 
correctness  of  my  figures  in  Schedules  1  to  4. 

In  Schedules  5  to  8  I  carefully  detailed  the  store's  gross  profit, 
expenses,  net  profit,  increases  in  resources  and  liabilities  and  showed 
how  the  net  profit  of  $7,847  (or  8  per  cent  on  sales)  was  reached. 

In  Schedule  9  I  showed  one  of  the  simplest  methods  of  **  estimat- 
ing" the  amount  of  stock  on  hand  at  each  month's  end,  of  learning  the 
** approximate  amount"  of  each  month's  gross  profit,  the  ** approxi- 
mate" cost-price  of  the  goods  sold  during  each  month,  the  **  average 
stock"  which  the  store  carried  during  the  year,  how  many  times  the 
store's  stock  was  turned,  etc 

A  schedule  of  that  kind  can  easily  be  prepared  by  any  merchant 
and  will  prove  of  great  value  to  him  in  his  buying  and  selling,  in  his 
advertising,  in  connection  with  his  fire  insurance,  etc.  The  schedule  will 
keep  him  posted  regarding  his  gross  profit  also,  so  he  can  judge  whether 
he  is  properly  providing  for  his  expenses,  net  profits,  etc. 

The  work  on  the  schedule  is  so  simple,  moreover,  that  a  merchant 
can  prepare  a  separate  one  for  each  of  his  departments  and  thus  follow 
up  his  merchandising  to  much  better  advantage  than  otherwise. 

In  the  fourth  chapter  I  presented  Schedules  10  to  14,  wherein  I 
made  a  thorough  analysis  of  the  store's  cash  income  and  expenditure, 
showed  how  to  figure  its  cash  discounts  percentage — ^which  averaged 
about  2^4  per  cent  on  the  cost  price  of  its  purchases — showed  how  to 
find  what  percentage  (share)  of  the  year's  total  each  month's  purchases 
and  each  month's  sales  equaled,  etc. 

In  Schedule  15  herewith  I  show  how  the  store  lists  the  contents  of 
each  of  its  10  departments.  In  Schedule  16,  herewith,  I  have  listed  the 
gross  sales  of  each  department — that  is,  the  amount  before  customers' 
returns  were  deducted.    I  also  show  (for  each  department)  the  total 

80 


t\  \ 


j 


\ 


How  to  Find  the  Weak  Spots  in  Your  Merchandising         31 

of  tie  goods  returned  by  cash  customers  and  the  total  of  the  goods  re- 
turned by  charge  customers,  as  well  as  the  grand  total  of  each  depart- 
ment's returns  and  of  the  store  as  a  whole. 

gLUIIIIIIIIIlllllllllllllllllllllllHIIIIIIIIIIIIIIUIIIIIIIIIIIIIlHIIIIIIIIIIIIIIIIIIIIIIIIIHIIIIIIIIIIIIHinillll"^ 

I  SCHEDULE  15 

I       How  the  Store  Lists  the  Contents  of  Each  of  Its  10  I>epartmenta 

I         1  OEOCEBY  DEPARTMENT— All  eatables. 

I  2  DRY  GOODS— All  woolen  and  cotton  piece  goods;  bed  furnishings,  laces;  em- 

I  broideries;  yarns,  curtains  and  draperies;  veils  and  veiling;  table  cloths,  napkins 

I  and  linens. 

I  3  NOTIONS— All  threads  and  needle  goods  of  all  kinds;  ribbons;  jewelry;  tninka; 

I  suit  cases;  bags  and  purses;  umbreUas. 

I        4  SHOES — ^AU.  leather  and  rubber  footwear. 

i  5  FURNISHINGS— Men's  and  boys'  pants,  overalls  and  shirts;  men's,  boys'  and 

I  ladies'  neckwear;  waists;  skirts;  hats;  caps;  gloyes;  suspenders;  and  all  fumiah- 

1  ings  for  all  the  family. 

I  6  HOSIERY  AND  UNDERWEAR— All  knit  goods,  hosiery,  underwear,  sweaters. 

I        7  CLOTHING — ^All  ladies'  suits  and  coats;  men's  and  boys'  suits  and  overcoats;  also 
I  children's  wear. 

^         8  HARDWARE — Curtain  poles  and  window  shades,  glassware,  chinaware,  enameled 
ware,  brooms,  shovels,  hoes,  rakes,  knives,  stoves,  lamps  and  lanterns,  and  all  house 
furnishings. 
9  FLOOR  COVERING — Carpets,  rugs,  linoleum,  matting,  oilcloth. 
I       10  SILK  (Formerly  in  with  Dry  Goods)— All  silks,  crepes,  velvets. 

^lllllllllllllllllllllllllllllltllllllllltllUIIIUIIIIIIIIIIHIIIIIUIIlllllllllllilillllllllllllllUIIIIUIUHIIIIIIIIIIIIIUllllin 

In  one  of  the  letters  which  the  store  sent  me,  I  was  informed  that 
its  cash  sales  represented  about  55  per  cent  of  the  total  and  that  the 
charge  sales  represented  the  remainder,  or  45  per  cent.  As  can  be  seen 
at  the  foot  of  column  1  of  Schedule  16,  the  store's  gross  sales  for  the 
year  totaled  $99,663.  We  may  assume,  therefore,  that  the  gross  cash 
gales— 55  per  cent— equaled  $54,663,  and  that  the  charge  sales — 45  per 
cent — equaled  the  remainder,  viz.,  $45,000. 

As  to  Customers*  Returns 

Upon  dividing  the  total  cash  returns,  $480,  by  $54,663,  I  find  that 
the  cash  returns  equaled  less  than  1  per  cent  of  the  gross  cash  sales. 
Upon  dividing  the  total  charge  returns,  $1,204,  by  $45,000, 1  find  that  the 
charge  returns  represented  less  than  3  per  cent  of  the  gross  charge 
sales.  Then,  upon  dividing  the  total  returns,  viz.,  $1,684,  by  $99,663 
(the  total  gross  sales),  I  find  that  all  the  goods  which  the  customers 
returned  to  the  store  during  the  year  averaged  less  than  2  per  cent. 

In  column  5  of  Schedule  16 1  show  the  amount  of  each  department's 
net  sales.  (By  net  sales  I  here  mean,  of  course,  that  amount  which  is 
left  after  deducting  the  customers'  returns.) 

Each  Department's  Share  of  Business  Done 

In  column  6  of  Schedule  16,  moreover,  I  show  what  share — ^that  is, 
what  perc&ntage — of  the  store's  entire  net  sales  was  contributed  by 


i 


32 


Eetail  Profits,  Turnover  and  Net  Worth 

Sdl  of  its  departments.  To  illustrate  how  I  found  these  percentages, 
let  me  take  the  figures  of  the  grocery  department  as  an  example :  The 
grocery  net  sales  (as  shown  in  column  5  of  Schedule  16)  totaled  $34,636. 

yiiiiiiiiuiiiiuiiiiiiuiiuiiiiiiiiiiiiiiiiiiimmiiiii^ 


»      I 


How  to  Find  the  Weak  Spots  in  Your  Merchandising 


33 


llitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiiiiiuiiiHiiiinniiiiiiMiiiniiiiiiiiiiiiiiiniiiiiniin 


rt 


For  details  of  each  department's  goods  see  Schedule  15. 

The  smaller  figures  in  column  6  are  TENTHS  (of  1  per  cent).  .       g 

To  find  each  department's  percentage  for  column  6,  divide  the  department  a  item  in    = 

column  5  by  the  total  of  column  5.  ,    .     ,         ,        ^  j  ^.v  *.  4.v»  <.4.».<.>.    i 

a  Upon  dividing  the  total  of  column  4  by  the  total  of  column  1  we  find  that  the  store  s    | 

I    customers'  returns  for  the  year  equaled  less  than  2  per  cent  of  the  gross  sales  for  the    | 

i    period.  ,      .  i.  _4.  1 

I  For  other  percentages  regarding  customers'  returns  see  text.  j 

|„„„„„„„u,, HiHiiiiiiiiii iiiiiiiiiiiiiiiniiiiiiiiiiiiiiiiiiiii iiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiHiiiti iitiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiniiiiiiiii iiiiiiiiiiiiiiiuiii'i»"'i^' 

Upon  dividing  that  amount  hy  $97,979  (the  total  net  sales)  I  found  that  '' 
the  grocery  (net)  sales  exceeded  35  per  cent.  I  entered  the  grocery  \ 
percentage  in  column  6  of  Schedule  16  accordingly. 

The  smaller  figures  in  this  percentage  column  of  Schedule  16  repre- 
sent tenths  of  one  per  cent;  hence  the  grocery  net  sales  share  is  to  be    ) 
read  thus :  '*35  3/10  per  cent  of  the  total  net  sales."  * 

One  of  the  main  purposes  of  Schedule  17  is  to  find  each  depart- 
ment's gross-profit  exclusive  of  cash-discounts.  My  first  step,  there- 
fore was  to  determine  the  cos^price  of  the  goods  sold  by  each  depart- 
ment during  the  year.  Columns  1  to  5  of  Schedule  17  show  precisely 
how  this  is  done. 


i\ 


( 


1  3 

i;iiiiiniiiiiiiiiiiiiiiiiiiiiiiii;iiniiiiiiiiiiiiiiiiii;iiiiii!iiiiitiiiiiiiiiiiitniiitiiiiitiiiiiitiniiiiiiiiiiiiiiiiiiiiiiiiiiitiiiiiiiiiiiiiiiiiiiiiin 


■,!■ 


E 


34 


Retail  Profits,  Turnover  and  Net  Worth 


I 


Each  Department's  Share  of  Gross  Profit  ) 

Then  to  find  the  gross  profit  of  each  department  (exclusive  of  it^ 

«.sh  ^:rountsrall  I  had  to  do  was  to  subtract  the  amount  in  column  5 

'--£-s':£^!^.Ti:i^i^i^n.s  ,ross  .r^^^i 

L1*ch*:tn7Tofonl^^^^ 

Tsee  Si  8),  but  aJhow  to  find  the  percentage  on  cost  pnce  (see 

""^T  the  foot  of  Schedule  17  I  have  given  a  formula  which  shows 
prechely  how  the  figures  for  the  various  column  are  "omput^^^^  To 
avoid  misunderstanding,  however,  we  repeat  that  to  ^d  me  per 
ZXJes  for  column  8  I  divided  the  amount  m  column  7  by  the  cor- 
^CSU  a^oSTin  column  6.  To  find  the  percentages  for  eotojn  9 
i  r?ded  the  amount  in  column  7  by  the  correspondmg  amount  m 

""'Tnd'emeath  the  Schedule  17  I  tell  how  to  f  temm^^^tr'sTJ^ 
ment's  percentage-share  of  the  stock  on  hand  at  the  fiscal  year  s  start 

and  end. 

To  Find  Each  Department's  Customers'  Returns  Ratio 

A  different  method  is  to  be  used  to  find  what  P^^^J^gVor 'tto 
department's^oss  sales  was  returjje^by  ^^^ -^--„,^-rs 

purpose  we  must  f  ™  ^^/^^  16)  by  the  department's  total  gross 
(shown  m  column  4  of  ^^^^^^f '^^V^^^  to  illustrate:     According 

sales  sho^  in  cohmn  }  ^Jj^Sch^d^l^^^^     ^^^^^^^^^  ^^^^^^^ 

:  iTSwol  oSood  .  Upon  dMding'by  the  shoe  gross  sales  (shown 
^tSn  r^?sSnle  16)!  viz.,  $11,981, 1  find  thaVhe«ho«  returns 
m  ouiumu  .    *  ^^    ^^gg  giloe  sales  for  the  year. 

'%vtsU^Ms  s^e  method  I  Z  obtained  the  following  per- 
15y  using  tms  °f^^,,     „^^prv  mece  coods,  notions  and  silk 

sales;  in  the  men  s  a°f  Y/™!r  rent     In  the  knit  goods  department 
the  floor  coverings  they  were  about  ly*  per  cent 


n 


. 


^ 


CHAPTER  VI 

Buy  Your  Gk>od8  Right,  Then  Mark  Them  Right  and  Sell 

Them  Right 

A  QUESTION  that  is  of  vital  importance  to  merchants  everywhere 
^^  is  that  of  how  to  properly  mark  goods.  Many  a  retailer  handicaps 
not  only  his  own  progress,  but  also  that  of  his  more  immediate  com- 
petitors through  a  lack  of  knowledge  as  to  the  computing  of  costs 
and  of  gross  profit  percentages. 

Goods  must  be  bought  ** right"  and  then  must  be  marked  and  sold 
**righf  That  is,  there  must  be  added  to  laid-down  cost  price  such 
a  percentage  as  will,  in  turn,  produce  on  selling  price  that  percentage 
which — ^after  providing  for  expenses,  shrinkages,  etc. — ^will  give  the 
merchant  a  fair  net  percentage  of  profit. 

And  in  determining  what  is  a  **fair  net  percentage  of  profit"  for 
him,  not  only  his  investment,  but  also  his  ** labor"  ought  to  be  duly 
taken  into  account. 

The  following  outline  will  give  a  general  idea  of  simple  methods 
to  be  pursued. 

Providing  for  Profit  in  Pricing  Goods 

Suppose  such  a  merchant  wishes  one  of  his  departments  to  sell 
its  goods  at  a  gross  profit  equivalent  to  33  1/3  per  cent  on  their  selling 
price.  The  merchant  ought  to  know  that  to  produce  such  a  result  the 
goods  must  be  soi>d  at  an  average  advance  equivalent  to  50  per  cent 
of  their  cost  price. 

Why?  Because  a  gross  profit  of  50  per  cent  on  an  article's  cost 
price  is  equal  to  only  33  1/3  per  cent  on  its  selling  price. 

Don't  Forget  the  Shrinkages 

He  must  not  forget,  though,  that  for  various  reasons — ^f or  example, 
because  of  the  leakages,  reductions  and  other  shrinkages  which  occur 
before  goods  are  sold — ^if  the  department  is  really  to  show  an  average 
igross  profit  equivalent  to  50  per  cent  on  the  cost  price  of  its  goods,  he 
must  sell  many  of  those  goods  at  a  far  higher  percentage  above  coslj 
than  the  50  per  cent. 

And  that  is  true  regarding  goods,  no  matter  what  the  percentage 
of  profit  desired,  or  needed,  may  happen  to  be. 

To  put  the  matter  a  little  differently:  Wise  merchants  do  not 
haphazardly  add  a  certain  profit  (percentage)  to  the  cost  of  their  goods 

35 


36 


Retail  Profits,  Turnover  and  Net  Worth 


Buy,  Mark  and  Sell  Your  Goods  RigM 


37 


and  then,  let  us  say,  '*by  chance '*  learn  what  percentage  of  the  selli>  ag 
price  their  gross  profits  will  represent.  No.  They  determine  in  advam  3e 
what  percentage  of  their  selling  price  they  wish  their  gross  profit '  co 
equal;  and  then  after  making  due  allowance  for  shrinkages,  etc.  (arid 
by  adding  the  necessary  percentage  to  cost  price),  they  fix  their  sellin  'g 


price 


Before  going  further,  let  me  cite  some  concrete  examples : 

Some  Concrete  Examples 


I 


When  an  article  is  to  be  sold  at  a  gross  profit  equivalent  to  25  per 
cent  on  its  selling  price  it  is  necessary  to  mark  that  article  at  a  price 
which  is  not  less  than  33  1/3  per  cent  above  its  cost  price— because  . 
a  gross  profit  which  is  equivalent  to  33  1/3  per  cent  of  an  article's  cost 
price  is  equivalent  to  only  25  per  cent  on  that  article's  selling  price. 
Tf)  illustrate  * 

Take  an  article  which  costs  $1.50  and  which  the  merchant  wishes  to 
sell  at  a  gross  profit  equivalent  to  25  per  cent  of  its  selling  price. 

Now  33  1/3  per  cent  of  the  cost  price  ($1.50)  is  50  cents,  and  if  the 
50  cents  is  added  to  the  $1.50  we  get  $2.00,  the  price  at  which  we  'will 
try  to  sell  the  article.  If  the  article  is  sold  for  $2.00  the  gross  profit 
thereon— 50  cents— as  can  be  seen,  will  represent  only  one-fourth  of 
the  selling  price  (and  one-fourth  of  anything  is  25  per  cent  of  that 

But,  that  same  gross  profit  of  50  cents,  while  it  is,  as  just  said, 
only  one-fourth  (25  per  cent)  of  the  selling  price  ($2.00),  is  nevertheless 
equal  to  one-third  (33  1/3  per  cent)  of  the  cost  price  ($1.50). 

Take  another  illustration: 

If  an  article  which  costs  $3.00  is  sold  for  $4.00,  then  the  gross  profit 
($1.00),  while  equivalent  to  only  one-fourth,  25  per  cent,  of  the  $4.00 
selling  price,  is  nevertheless  equivalent  to  one-third  (33  1/3  per  cent) 
of  the  $3.00  cost  price. 

To  repeat:  A  gross  profit  of  33  1/3  per  cent  on  an  article's  cost 
price  is  equivalent  to  only  25  per  cent  on  its  selling  price. 

Dififerent  Ratios 

Now  to  take  a  different  percentage : 

If  an  article  which  costs  $100  is  sold  for  $125,  the  gross  profit  is 

$25.00. 

This  gross  profit  being  one-fourth  of  the  cost  price  ($100)  repre-* 
sents  25  per  cent  on  that  cost  price.  But,  at  the  same  time  that  gross 
profit  ($25.00)  represents  only  one-fifth  of  the  selling  price  ($125); 
hence  represents  only  20  per  cent  thereon.  ^ 

Thus,  it  is  to  be  noted  that  the  merchant  who  desires  to  effect  a 
gross  profit  which  is  equivalent  to  20  per  cent  on  the  selling  price  of 
an  article,  must  add  to  the  cost  price  of  that  article  a  gross  profit  which 
is  equivalent  to  not  less  than  25  per  cent  on  that  cost  price. 


\ 


I 


I 


r 


To  repeat:  A  gross  profit  of  25  per  cent  on  an  article's  cosi  price 
is  equal  to  only  20  per  cent  on  its  seUing  price. 

"Review" 

Let  none  of  my  readers  believe,  however,  that  all  that  any  mer- 
chant will  have  to  do  in  order  to  obtain  a  gross  profit  of  33  1/3  per  cent 
on  the  sdlmg  price  of  all  his  goods  will  be  to  add  50  per  cent  to  the  laid- 
down  cost  price  of  each  article. 

And  don't  let  it  be  thought  that  to  obtam  an  average  gross  profit  of 
25  per  cent  on  the  sdlmg  price  of  (Al  of  one's  goods  one  need  smiply 
add  33  1/3  per  cent  to  the  laid-down  cost  price  of  each  article. 

Again,  to  produce  an  average  profit  of  20  per  cent  on  the  seUxi^g 
price  of  all  of  one's  goods  one  mnst  do  more  than  merely  slap  25  per 
cent  on  the  laid-down  cost  price  of  each  article. 

Price  for  Each  Lot  Must  Be  Gauged 

As  is  well  known,  in  any  department,  or  store,  in  which  an  average 
gross  profit  equivalent  to  33  1/3  per  cent  on  selling  price,  for  example, 
is  desired,  to  produce  the  desired  average  many  of  the  items  must,  as 
suggested  above,  be  sold  at  a  price  which  involves  a  "profit'  not  only 
of  the  equivalent  50  per  cent  of  their  laid-down  cost  price,  but  (withm 
the  "law")  of  a  far  higher  rate.  ,        .        x         x  ,„ 

And  why?  Because  other  goods  in  the  same  department,  or  store, 
may  have  to  be  started  at  "a  profit"  which  represents  only  25  per  cent- 
er even  less— of  their  laid-down  cost  price. 

In  a  word,  not  only  must  market  conditions,  style,  competition,  etc., 
be  duly  considered,  but  the  fact  that  during  the  year  there  is  a  con- 
siderable amount  of  shrinkage-due  to  reductions  m  prices,  over- 
measuring,  pilfering,  etc.,  must  be  constantly  borne  in  mmd. 

Consequently  each  wise  merchant  so  marks  each  lot  of  goods  tnat 
after  all  shrinkages,  reductions,  and  all  other  incidentals,  as  freight 
and  expressage,  workroom  costs,  etc.,  have  been  taken  into  considera- 
tion, his  department  or  store  will  at  the  season's  or  year's  end  show 
the  desired  percentage  of  gross  profit  on  selling  price.    And  that  is 

not  all. 

How  Big  Stores  Follow  Up  Profits 

In  the  big  stores,  in  order  to  help  each  department  head  produc« 
_e  desired  results,  he  is  kept  informed  as  closely  as  possible  in  regard 
0  the  condition  of  his  stock,  etc.  . 

Begnlarly  in  such  stores  the  "merchandise  man"  and  firm  receive 
'rom  the  office  a  list  showing  the  stock  on  hand,  purchases,  sales,  amount 
of  goods  ordered  (and  still  to  come)  in  each  department.  And  in  these 
lists  are  noted  not  only  "this"  year's  figures,  but  also  the  correspond- 
ing figures  fif  ' '  last ' '  year,  etc. 
'        And  if  the  figures  of  a  department  indicate  that  there  is  something 


-  '/■ 


I 


(1 


I 


..^a^B^^ 


n 


3g  Retail  Profits,  Turnover  and  Net  Worth 

wronir  with  it^for  example,  that  its  stock  is  increasing  at  a  time  when 
it  ought  to  he  decreasing-the  buyer  is  at  once  informed  and  the 
proper  steps  are  taken  in  order,  if  possible,  to  locate  the  cause  of  the 
trouble  and  promptly  remove  it.  ,  ^  i.  i.u 

To  simplify  the  figures  as  much  as  possible,  and  to  present  them 
in  convenient  form  for  quick  reference,  I  give  in  Schedule  18  paraUel 
columns  of  percentages. 

«liwiniiiiiiiimiimiiiiniiiiiiiiniiiii>iii>ii">iiiiiiiii><*^^^ 


C5 

I 


"A" 

Gross  Profit  Per- 
centage on 
Selung  Price. 
50      per  cent 

35 
331/3 

31 
30 

28  4/7 

28 

27 


SCH£DULiE  18 


a 


<( 
it 
ic 

a 
fi 


Corresponding 

Percentage  on 

Cost  Price. 

100       per  cent 

537/8 

50 

45 

42  6/7 

40 

39 

37 


a 

fC 
CI 

it 
n 
a 

C( 


tt^fp 

Gross  Profit  Per- 
centage on 
Selunq  Price. 
25       per  cent 
23 

211/4 

20 

18 

i2y2 

10 


(( 


fi 
ii 
ii 
<c 
ii 


4i^fP 

Corresponding 
Percentage  on 

Cost  Price. 
33 1/3  per  cent 

297/8  ** 

27 
25 
22 

14  2/7 
111/9 


a 


II 


1 


L-™«^^^^^^ 1 m p.... mmmm mmmmmmmmmmtmmmmmm ....<- « — « » ^ 

In  each  of  the  two  columns  headed  "A"  I  present  the  avebage 
gross  profit  percentage  some  may  desire  to  have  on  feHt«^  price. 
Next  to  each  of  such  percentage  I  show,  in  the  parallel  wlumn  (headed 
"B"),  which  percentage  on  cost  price  the  neighbormg  percentage 
reoresents  approximately.  , 

Don't  forget,  though,  that  as  suggested  above,  marking  goods 
a  certain  price  is  one  thing,  seMm^  them  at  that  price  may  P^ove  to  be 
a  very  different  thing.  Hence,  deficiencies  must  be  carefuUy  guarded 
against  in  advance. 


CHAPTER  VII 

Stock  Record  Shows  at  Glance  What  You  Want  to  Know 

LIVE  merchants  know  how  essential  it  is  to  be  able  to  keep  in  close 
touch  with  what  is,  or  is  not,  selling;  with  what  is,  and  what  is  not 
in  stock;  with  what  is,  or  is  not,  ** paying''  the  necessary  profit.  One 
of  the  simplest  systems  employed  for  such  purposes  is  that  used  by 
the  Barmann  Shoe  Co.  of  New  York.  While  this  is  a  shoe  stock  system, 
it  can  readily  be  adapted  by  any  merchant  for  various  other  kinds  of 
merchandise,  such  as  garments,  waists,  underwear,  hosiery,  clothing, 

hats,  rugs,  etc. 

The  Barmann  Shoe  Co.,  be  it  noted,  tjonducts  two  stores  m  New 

York  City. 

The  system  is  simple,  inexpensive,  takes  little  time  to  run;  yet 
day  by  day  it  can  be  made  to  answer  the  following  vital  questions, 
almost  in  a  glance  I 

Vital  Questions  Answered  Daily 

1.  What  is  (or  what  is  not)  on  hand,  in  each  size,  color,  width, 

style,  quality,  etc.t  .       ,,  .  i.. ,, 

2.  Which  goods  are  (and  which  goods  are  not)  moymg  ** right 
(and  hence,  which  goods  ought  to  be  pushed,  **  reduced, '(^  otherwise 
carefully  followed  up)  T 

3.  What  is  the  total  quantity  bought  (of  each  item)  T 

4.  What  is  the  total  quantity  sold  (of  each  item)  t 

5.  What  is  the  gross  profit  on  each  item  sold  ** yesterday"! 

6.  What  is  the  total  gross-profit  for  ** yesterday"! 

The  kind  of  stock  record,  or  permanent  inventory,  which  the  Bar- 
mann Shoe  Co.  is  using,  therefore,  ought  to  be  of  great  value  to  any 
merchant  or  other  buyer  of  merchandise,  particularly  of  staples,  as  a 
guide  in  making  his  purchases. 

In  the  accompanying  **form"  I  show  a  fragment  of  the  top  section 
of  one  of  the  loose  leaves,  kept  in  a  binder,  which,  simple  as  it  is,  is 
practically  the  whole  ** works."     (See  Schedule  19.) 

Each  leaf  is  about  thirteen  inches  square.  Both  sides  of  the  leaf 
are  divided  horizontally  into  three  sections  (so  that  on  each  leaf  trade 
can  be  kept  of  at  least  six  different  stock  numbers). 

Underneath  each  stock  number,  too,  there  is  room,  horizontally, 
for  keeping  track  of  eight  widths^thsit  is,  from  AAA  to  F.    Vertically, 

39 


4i 


40 


Eetail  Profits,  Turnover  and  Net  Worth 


piMimiiunii»,i.iwnHi.miimiiimiiiiiiiHiiiiiiiiiiiiini.iniiiiiiiiiiiiiiiii,(ii,,ii,,,,,,,,,,,,,,,,,,,,„,,,^ 


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stock  Record  Shows  at  Glance  What  You  Want  to  Know      41 

as  can  be  seen,  each  section  of  the  sheet  is  so  ruled  as  to  provide  for 
every  size  from  0  to  13%,  etc. 

Simple  Stock  Numbering  Plan 

Once  the  system  is  in  running  order  the  task  of  keeping  it  up  to 
date  is  a  matter  of  a  *  *  few  minutes ' '  daily.  To  get  it  started,  of  course, 
calls  for  some  painstaking  work;  but  it  is  well  worth  it. 

In  Mr.  Barmann's  case,  the  first  step  was  to  divide  the  stock  of 
shoes  into  specific  groups — ^men's,  women's,  etc. — so  as  to  be  able  to 
reserve  sets  of  stock  numbers  for  each  group.  Thus,  in  his  stores  on 
infants'  cacks,  the  stock  numbers  run  from  1  to  100;  on  infants'  wedge 
heels  the  numbers  run  from  100  to  200;  on  infants'  welts,  sizes  6  to  8, 
from  200  to  300;  on  children's  welts,  sizes  8y2  to  11,  the  stock  numbers 
run  from  300  to  400 ;  and  so  on  throughout  the  entire  stock. 

My  readers  will  appreciate  my  adding  that  to  simplify  matters, 
Barmann's  give  **odd"  stock  numbers  to  lace  shoes  and  *'even"  num- 
bers to  button  shoes.  And  they  go  further,  viz.,  to  take  care  of  colors, 
each  of  certain  groups  is  divided  into  four  sub-groups ;  the  first  quarter 
being  used  for  white  shoes ;  the  second  quarter  of  the  group  for  brown; 
the  third  quarter  for  blaclc,  and  the  remaining  quarter  of  the  group  for 
combinations  and  novelties. 

Thus  the  stock  number  given  to  a  shoe  instantaneously  describes  it. 
To  illustrate:  In  the  form  accompanying  this  article  the  shoe  illus- 
trated is  number  1569,  an  **odd"  number.    Therefore,  the  shoe  must  be 

a**lace,"  etc. 

In  the  stock  record  binder  the  loose  leaves  run  in  rotation  accord- 
ing to  the  stock  numbers.    Thus  it  takes  but  an  instant  to  turn  to  the 

record  of  any  shoe. 

Start  with  Inventory 

To  inaugurate  such  a  system  one  ought  to  be^n  after  an  inventory- 
has  been  taken  and  give  to  the  shoes  on  hand  that  are  to  be  re-ordered 
a  stock  number  from  the  group  in  which  they  belong  (so  that  they  can 
be  entered  on  the  proper  sheets  in  the  record  according  to  their  num- 
bers, widths,  sizes,  etc.).  Then,  as  new  goods  arrive  they  must  be 
given  the  lowest  unused  stock  numbers  in  the  group  to  which  they 
belong,  and  be  entered  in  the  record  accordingly.  If  desired,  stock 
numbers  can  be  given  also  to  rubbers,  hosiery,  findings,  etc. 

Each  Store's  Stock  Controlled  Separately 

Barmann's,  as  said,  have  two  stores,  which  they  number  Store  1 
and  Store  2 ;  B.  F.  Barmann  looks  after  the  one  branch  store  and  A.  C. 
Barmann  looks  after  the  other.  So  as  to  keep  track  of  the  goods  of 
each  branch  separately,  they  use  white  loose  leaves  for  the  stock  record 
of  Store  1,  and  yellow  sheets  for  Store  2.  They  keep  the  two  sets  of 
sheets  in  the  same  binder,  but  by  themselves— jn&t  as  though  the  sheets 
were  in  separate  binders. 


42 


Eetail  Profits,  Turnover  and  Net  Worth 


As  shown  in  the  accompanying  form,  stock  number  1569,  bought 
from  the  Thos.  H.  Cohen  Co.,  is  a  woman's  black,  glazed  kid,  military- 
heel,  **lace."  Its  cost  price  (in  code)  is  **G  I  K,*'  and  its  selling  price 
(in  plain  figures)  is  $11.00. 

As  shown  at  the  left-hand  side  of  the  form,  near  the  top,  there 
came  into  Store  No.  2,  on  Jan.  7, 1920,  a  shipment  of  36  pairs  of  these 
shoes.  After  the  shoes  had  been  carefully  compared  with  the  order 
copy  and  bill,  referring  to  them,  their  arrival  was  duly  noted  in  the 
record  in  ink.  The  total  number  of  pairs  received,  36,  and  the  date  on 
which  they  came  in,  Jan.  7, 1920,  were  noted,  as  said,  in  the  upper  left- 
hand  comer. 

Details  of  Goods  Received  Entered  in  Pencil 

Then  in  pencil,  one  by  one,  according  to  the  sizes  received,  the 
twelve  B's  were  noted,  as  shown  in  the  form ;  next,  the  twelve  C's  were 
noted ;  and  then  the  twelve  D  's.  As  can  be  seen  in  the  form,  excepting 
in  the  case  of  the  D's,  there  was  only  one  shoe  of  each  size  and  width 
to  be  noted.  In  the  D's,  in  sizes  5,  5i/2>  and  6,  two  of  each  came  in — so 
two  strokes  (//)  had  to  be  entered  in  each  of  the  three  proper  size 
columns.  If  any  more  of  these  shoes  would  come  in,  the  subsequent 
arrivals  would  be  recorded  in  the  same  manner;  first,  the  total  would 
be  entered  at  the  top  in  ink;  and  then  the  individual  sizes  (and  widths) 
at  the  bottom,  in  pencil.  Thus,  by  looking  at  the  top  of  each  stock 
number  we  can,  at  any  time,  see  how  many  have  come  in. 

How  Sales  Are  "Recorded" 

Now  as  to  the  sales:  When  a  salesperson  sells  a  pair  of  shoes 
he  notes  on  the  saleslip  covering  the  transaction  the  selling  price,  also 
(a)  the  stock  number  (b)  the  size,  and  (c)  the  width  of  the  item. 
Each  morning  the  previous  day's  saleslips  are  laid  in  rotation,  accord- 
ing to  the  stock  numbers  they  contain,  and  then  the  stock  record  is 
corrected  as  follows : 

Let  me  use  the  1569  shoe  as  an  illustration :  Both  of  the  two  5D'8 
were  sold,  hence  the  two  5D  strokes  were  erased  and  the  space  left 
blank.  The  same  is  true  of  the  5i/^,  and  6  D*s;  that's  why  those  spaces 
are  blank,  also.  In  a  word,  when  all  of  a  certain  stock  number  have 
been  sold  its  size  spaces  will  be  entirely  blank. 

To  Determine  Total  Sales 

At  the  season's,  or  year's  end — or  at  any  other  time — under  each 
stock  number  the  pencil  figures  (indicating  the  stock  left  on  hand)  can 
be  totaled,  almost  in  a  glance.  By  deducting  such  total  from  the  total 
receipts  of  that  shoe  (shown  in  ink  in  the  upper  left-hand  portion  of 
that  stock  number)  one  instantly  determines  how  many  of  that  shoe 
have  been  sold.  To  illustrate,  suppose  that  of  1569,  we  bought  only  the 
36  recorded,  in  ink,  in  our  illustration;  and  suppose  that  at  the  end 


f\ 


t 


stock  Record  Shows  at  Glance  What  You  Want  to  Know      43 

of  the  season  the  pencil  figures  in  the  1569  record  show  that  there  are 
only  three  pairs  left  on  hand,  it  takes  but  an  instant  to  determine  that 
33  pairs  of  1569  were  sold  in  the  period  indicated  (viz.,  since  Jan.  7, 
1920). 

Other  Advantages 

The  merchant  who,  in  following  up  his  stock,  has  such  a  record 
to  refer  to  can  more  readily  keep  in  touch  with  slow  sellers,  and  thus 
more  advantageously  dispose  of  them,  can  keep  his  stock  freer  trom 
broken  lines,  can  gauge  re-orders,  etc.  ,  .  ^     u 

Again,  in  case  of  fire  or  burglary  loss,  the  record  ought  to  show 
almost  to  a  pair  how  much  stock  was  on  hand  when  the  record  was  last 
corrected.  And  again,  since  each  stock  number  shows  (in  code)  the 
cost  price  of  the  shoes  recorded  thereunder,  the  employe  who  keeps 
the  record  can,  day  by  day,  if  so  instructed,  easUy  note  on  a  rough  sheet 
(to  be  used  only  for  this  purpose)  the  gross  profit  made  on  each  pair 
of  shoes  sold  on  the  previous  day. 

It  will  take  but  a  few  minutes  to  foot  these  notations  and  thus 
learn  daily  the  total  gross  profit  on  the  shoes  that  were  sold. 

And,  be  it  noted,  too,  this  plan  saves  work  and  worry  in  other  ways ; 
for  example,  it  obviates  the  need  for  marking  the  cost-price  on  the  shoes, 
or  tag,  or  box,  etc.  The  stock  number  is  the  key  to  the  cost,  and  only 
the  boss,  or  the  record  keeper,  can  get  at  it. 


C31APTER  VIII 

What  Share  of  Rent  Are  You  Paying  for  Your  Part  of 

Selling  Space? 

TN  Schedule  20  (covering  department  distributions)  there  is  indi- 
-"-  cated  how  large— or  how  small— a  share  of  the  rent  chargeable  to 
the  selling  area  in  a  well  known  eastern  Pennsylvania  store  was  appor- 
tioned directly  to  each  of  its  selling  departments.  The  schedule,  as 
can  be  seen,  shows  what  changes  were  niade  in  such  shares  during  the 
three  years  in  the  period  ended  Dec.  31,  1919. 

The  smaller  figures  at  the  end  of  each  item  represent  tenths  of  1 
per  cent  I  print  the  ratios  in  this  way  so  as  to  make  it  more  easy 
for  my  readers  to  read  and  remember  them. 

In  order  to  indicate  how  the  value  of  the  space  occupied  by  each 
department  was  gauged,  the  store  in  question  was  kind  enough  to  give 
me  the  following  details : 

How  Department  Apportionment  Was  Made 

To  get  figures  on  which  to  base  the  rental  charges,  the  space  oc- 
eupied  by  each  department  as  well  as  its  location  was  taken  into  con- 
sideration by  five  employes  in  the  store,  each  acting  separately.  These 
f[ve  were  respectively  an  office  man,  auditor,  buyer,  floorman  and  sales- 
person. 

They  laid  out  one  section  on  the  main  floor,  and  for  the  time  being 
assumed  it  was  worth  $100.  Then,  using  that  space  as  a  base,  each  one, 
independently,  estimated  and  computed  the  value  of  all  the  space 
occupied  by  the  selling  departments. 

How  Estimates  Were  "Checked" 

The  results  of  the  five  tabulations  were  compared  so  that  abnormal 
ratings  could  be  adjusted.  Then  the  five  figures  were  added  together 
and  their  total  was  divided  by  five,  so  as  to  strike  the  average. 

This  method,  we  believe,  gives  us  a  fair  basis  for  rent  apportion- 
ment among  the  selling  departments,  and  has  never,  to  our  knowledge, 
caused  any  adverse  criticism. 

''The  balance  of  the  store  rent  is  charged  to  the  not^-selling  depart- 
ments—but, of  course,  eventually  reaches  the  selling  departments  in  the 
distribution  of  the  'overhead."  " 


What  Share  of  Rent  Are  You  Paying! 


45 


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Eetail  Profits,  Turnover  and  Net  Worth 


SCHEDUUS  21 

Basement 13^ 

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as  well  as  that  which  was  not  used  for  selling — ^the  rent  was  divided 
as  shown  in  Sdiedule  21. 


\l 


CHAPTER  IX 

Cash  Discounts  for  Three  Years  Compared  at  a  Glance    • 

DEPARTMENT  Schedule  22  shown  herewith  is  based  on  statistics 
generously  supplied  by  an  eastern  Pennsylvania  store.  For  each 
department  in  that  store  I  name  in  the  schedule  three  ratios;  these 
ratios  indicate  what  percentage  on  the  ** cost-price"  of  the  respective 
department's  paid-bills  its  (the  department's)  cash  discounts  for  the 
years  1917,  1918  and  1919  averaged. 

To  briefly  outline  how  all  the  ratios  contained  in  the  schedule  were 
computed,  let  us  use  the  1919  Art  Embroidery  item  as  an  illustration : 

Year's  End  Work 

After  the  close  of  the  year  1919  to  find  the  1919  cash  discount 
average-percentage  for  the  art  embroidery  department,  the  total  of 
the  dollars  and  cents  amounts  of  the  art  embroideries'  1919  cash  dis- 
counts was  ascertained  and  was  divided  by  the  ** cost-price"  total  of 
the  art  embroideries'  1919  paid-tills. 

The  same  method  was,  of  course,  employed  to  find  the  art  em- 
broidery department's  1917  and  1918  average-percentage.  And, 
naturally,  the  method  that  was  used  in  the  case  of  the  art  embroideries 
was  used  also  in  the  case  of  all  the  other  departments  in  the  store. 

The  smaller  figures  at  the  end  of  each  item  in  our  schedule  repre- 
sent tenths  of  1  per  cent. 

It  will  be  noted  that  in  Schedule  22  the  departments  appear  in 
alphabetical  order.  They  have  been  presented  in  this  way  in  order  to 
make  it  easier  for  readers  to  locate  the  respective  items.  Care  has  been 
taken  too,  to  present  with  as  much  detail  as  practicable,  the  ** make-up" 
of  each  department.  For  example — ^the  schedule  clearly  shows  that  in 
the  Notions  department  there  are  not  only  the  restricted  groups  of 
items  which  some  stores  include  in  ** Notions,"  but  also  leather  goods, 
perfumery,  druggists'  sundries,  toilet  articles  and  hair  goods. 

At  the  foot  of  the  second  section  of  the  schedule  is  shown  what  per- 
centage on  the  cost  price  of  the  entire  store's  paid  bills  its  cash 
discounts  averaged  during  each  of  the  three  years.  As  can  be  seen, 
during  1917  the  store's  cash  discounts  averaged  almost  4%;  in  1918 
they  averaged  about  3%% ;  in  1919  they  averaged  a  little  over  3%. 

In  all  cases,  as  said,  these  percentages  are  based  on  the  cost  price 
of  the  goods  covered  by  the  bills  that  were  paid, 

47 


48 


Retail  Profits,  Turnover  and  Net  Worth 


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